Nokia: The Falling Weak Giant
Nokia is still doing bad. The demand is still falling in the worldwide markets and the worst is still to come.
The problem that Nokia is facing as stated by Charter Equity Research analyst Edward Snyder is that “Having launched its formal restructuring a year ago, Nokia is now facing the most difficult stretch where legacy products fall off before new platforms gain traction and competitors attack in each of Nokia’s markets…”
“This has happened to all the other large OEMs that attempted big turn-arounds and has always lead to much larger losses and, in many cases, an exit from mobile phones…” Edward writes.
He adds in the report: “The key differentiator between survival and failure is how quickly the company can restructure…”.
He also stated that: “Labor laws put European firms at a distinct disadvantage to North American and Asian firms, which was largely responsible for Siemens failure and Ericsson’s exit from phones. Nokia’s phone business is stronger than either of them at their peak but it faces similar impediments that will virtually guarantee greater losses in 2012. Indeed, mapping Nokia against the history of handset OEM failures suggests the largest losses are still to come. So while CEO Elop has made admirable progress, we don’t believe Nokia has turned the corner and would not recommend the stock at $4.”
Until this year, Nokia enjoyed a 14-year-run as the world’s largest maker of mobile phones. Still, it would not predict when the losses might end.
Its market value is now at $8.8 billion, 92% lower than where it stood when Apple released the iPhone and just above the price Microsoft paid last year for Internet phone company Skype.
Microsoft, which made its own big bet by choosing Nokia to build its flagship Windows Phone devices, is responding by increasing its aid for the handset maker. But if Nokia continues to struggle, the software giant may have to start searching for other options.
The companies bound themselves together last year in a last-ditch effort to compete in a smartphone market dominated by Apple Inc. and Google Inc., Microsoft faces the possibility that the company responsible for two-thirds of its mobile software shipments may not be strong enough to give it influence in mobile computing.
Did Microsoft get involved by the problems and losses of Nokia?
So far, the answer is yes.
Source(s): Forbes; The Wall Street Journal; Charter Equity Research; Ubergizmo; Tech Today.