Is the Era of Nokia Over For Good?
If Finnish handset maker Nokia (NYSE:NOK) did not already have enough on its plate maintaining a competitive edge, news that its revenues have slid further than analyst expectations to reach 13-year lows is certainly not going to grant the phone maker any reprieve.
First-quarter sales for all products fell by 20 percent, to5.85 billion euros (about $7.6 billion), well below the average estimates of 6.52 billion euros, as a result of plummeting phone demand, particularly in the lower-end market, Bloomberg noted. Nokia’s Lumia, its higher-end flagship offering, did not sell well enough to offset the losses felt on the lower end. The Windows Phone-driven phone has been facing mounting competition not only against Apple’s (NASDAQ:AAPL) iPhone, but against Asian manufacturers offering Google’s (NASDAQ:GOOG) Android operating system.
Though Android and iOS systems are leading the market, Nokia is not the only company launching comeback efforts. At the edge of the brink, BlackBerry (NASDAQ:BBRY) released what it hopes will be the savior of the brand, the Z10, another high-end handset that directly competes with Nokia’s Lumia, the iPhone, and Samsung’s (SSNLF.PK) Galaxy line.
The lower-end mobile phone business is not doing well, Mikko Ervasti, an analyst at Evli Bank Oyj in Helsinki, said in a phone interview with Bloomberg. They need to start pushing their Microsoft-based Lumias into cheaper prices to gain traction in emerging markets. The same emerging markets, one might add, that Apple will supposedly be targeting with its rumored cheaper iPhone, and that Samsung is cornering with a more affordable line of Galaxy phones.
The news sent Nokia’s stocks tumbling in pre-market trading in New York on Thursday, after experiencing slides in the Helsinki market as well. Though the company’s Lumia portfolio is doing well — the company sold 5.6 million of the units in the first quarter, over 4.4 million the quarter prior — Nokia CEO Stephen Elop addressed the competitive nature of the smartphone market, and acknowledged that the firm was taking “tactical action” to bring the company back.
Nokia’s net cash increased, from 4.4 billion to 4.5 billion euros, but the company decided to do away with its annual dividend — for the first time in 143 years — in efforts to improve its liquidity position.