Wednesday, 1 June 2011

Nokia Knocked Again

Nokia has once again downgraded its revenue and profit forecast. This has caused an 18% slide in the value of its shares.

Not a good time for the new UK General Manager, Conor Pierce, to take the helm and some important decisions will have to be made for the future. Nokia is still the highest shipper of handsets even if its market share is dwindling. The problem is that it still ships the vast majority of its handsets in the very low margin 'dumb mobile' sector. The high margin smartphone sector has largely passed them by and this is now being dominated by the rapid growth shown by companies like Apple and HTC.

Did Nokia's management underestimate the threat posed by companies like Apple who came from left field? Did Nokia cling to the hope that Symbian would be the de facto standard in mobile operating systems, again underestimating the threat that companies like Google posed - again coming from left field?

They have pinned all their hopes of a revival on their much publicised partnership with Microsoft. The first of the new handsets sporting Windows 7, as there is no real mobile operating system form Microsoft, will not be seen in UK markets until Q1 2012. It already sounds late.

Having already made announcements about 7,000 job cuts, the once mighty Nokia is a little punch drunk. But is it on the ropes?

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