Nokia Needs a Miracle!!!

By hemant nagla - October 20, 2012 | Tickers: AAPL, MSFT, NOK | 0 Comments

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Nokia needs a Miracle!!!

It didn’t come as surprise as Nokia (NYSE: NOK) declared its third-quarter results today.  It reported a loss of $1.27 billion accounting on sales of $9.44 billion which was better than expected for investors. The results were better for Nokia Siemens Networks, however not that good for the smartphone division.

The sales of smartphones dropped by 38% from 10.2 million in the second quarter to 6.4 million in the third quarter. The amount of Nokia Lumias sold was less than half of the total. While people might be thinking that Nokia may be selling more Windows phones than Symbian phones, the case is just the opposite. This has been the trend all throughout the year.

Nokia shipped around 82.9 million phones worldwide in the third quarter as compared to 83.7 million in the second quarter.  The average selling price of Nokia smartphones has dipped due to high sales of discounted Lumias 610 and 710 and less sales of the high end Lumia 800 and 900.

When Microsoft (NASDAQ: MSFT) previewed Windows Phone 8, Nokia clearly said that the current lineup of Lumia phones would not be upgradable to Windows Phone 8. This has been the main reason for the low number of sales for the Lumia smartphones.  Microsoft will unveil the complete Windows Phone 8 platform on October 29 after which the new Lumia devices will go on shelves.  The new Lumia 920, 820 & 810 will be available starting in November.  However, it is hard to determine whether these phones have the edge to win over the iPhone or Android devices. Below is an overview of the new Lumia handsets.

Nokia didn’t release any new products in the third quarter. The upcoming quarter is going to be more challenging as Samsung is planning to cut prices on Galaxy S2 and S3 smartphones as well as the iPhone 4 series. Other mobile manufacturers like Samsung, HTC and Huawei are also planning to launch Windows Mobile based devices which is even a bigger threat for Nokia.

Nokia, which ruled the cellphone market for around 14 years, has now been dethroned by Samsung which has become a leader in the smartphone market. Samsung has been launching new high end devices such as the Galaxy S3 and Galaxy Note 2 which are quite popular in the market. The Android OS is also a huge hit with the users. Blackberry maker Research in Motion is also struggling as the competition gets tough from iPhone and Android based devics. The competition from iDevices is also closing in on Nokia. Nokia has already announced more than 10,000 layoffs this year in an attempt to reduce operating expenses.

Nokia Siemens Networks has reported a second consecutive operating profit which comes as a sigh of relief.  This has also resulted in a rise in its share price by almost 10% which is a good sign for investors. However, investors still fear Nokia may be a sinking Titanic.

Unfortunately, the iceberg may be right ahead.

Nokia has no time to rest and it really needs a miracle now to revive its lost success.

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