It’s crunch time this month for Nokia–but odds look better than six months ago
Those positive reviews for Microsoft’s (MSFT) new Windows Phone 7.5 operating system are raising a smile in Redmond, I’m sure. But the big sigh of relief that you can hear is from Nokia (NOK.) That company bet its smart phone future on Microsoft’s operating system when it decided to sideline its own Symbian operating system in favor of Microsoft’s platform.
The transition has been extremely painful for Nokia as the company saw phone sales fall by 20% in the second quarter as Nokia, once the market share leader was passed by both Apple (AAPL) and Samsung. Nokia hopes to begin slowing the fall in its global market share against Apple’s iPhones and Android-based phones with new models expected to be announced at the yearly Nokia trade show in London at the end of October. (Assuming, of course, that Nokia can then get the new phones to market by early November to meet the holiday season.)
Nokia’s strategy looked very shaky after Microsoft announced its own attempt to get back in the phone game last year with Windows Phone 7. Reviews were generally positive but questioned if the operating system was ready to play with the big boys. Windows Phone 7 didn’t have Twitter support, Internet sharing, copy-and-paste, visual voicemail, or multitasking. All those competitive gaps have been filled in Windows Phone 7.5.
Plus the operating system has a unique look and feel that makes it something other than an iPhone wannabe. The home screen displays color tiles that represent collections of information and applications organized around a theme. The People hub, for example, collects contacts and social network feeds. The tiles also include automatic updates with things like newly received emails or calendar changes.
I wouldn’t say that Windows Phone 7.5 marks the end of Nokia’s troubles. Read more
Update Nokia (NOK)
Nokia (NOK) has put in a bid to be the other cell phone maker besides Apple (AAPL) to make a profit and have control over its business.
Now if the company could just get its new phone, the E7, out the door.
The success of Apple’s iPhone is built on the extraordinary power that controlling both he software and the hardware gives Apple. The company can make sure everything works together because it decides what gets on the platform and what doesn’t. No lame pre-installed apps from cell phone service providers. No word processing software that works differently in different programs on the same phone. No graphics that just kind of work.
Nokia is aiming for the same business model.
In early November the company decided to take full and sole control of the Symbian operating system for smart phones. To a degree Nokia had no choice. Its partners in the Symbian Foundation, set up to oversee the software, Samsung and Sony-Ericsson had abandoned the platform for Google’s Android. But Nokia decided that it would make the best of the hand it had been dealt: by taking over full control of the software, the company could customize the next version of the software for its next products and use it to develop a next generation operating system called MeeGo.
MeeGo is still scheduled to be introduced in 2011, but on December 14 Nokia announced that its new smart phone, designed to close some of the smart phone gap with not just Apple, but also Samsung and HTC, would miss the Christmas buying season completely. The phone wouldn’t hit stores until early 2011.
The delay isn’t a killer for either the E7 or for Nokia but it sure doesn’t do anything to help the company to regain momentum in the market. Read more
Update Nokia (NOK)
It’s a first step, but only a first step.
On September 10, Nokia (NOK) named Stephen Elop to replace Olli-Pekka Kallasvuo as president and CEO.
In Kallasvuo’s four years at the top of the company, Nokia lost market share to Apple’s (AAPL) iPhone and other smart phones as the company seemed unable to bring a competitive phone to the consumer market. He pushed the company to develop services such as music downloads and GPS navigation but couldn’t gain much traction against Apple and Google (GOOG) in the services segment. Nokia trades at roughly 15% of its 1999 peak market value. The shares are down 60% since Apple’s 2007 introduction of the iPhone.
Elop, a Canadian, will be the first non-Finn to run Nokia. He was most recently at Microsoft where he headed the unit responsible for Office. Before that he was chief operating officer at Cisco-competitor Juniper Networks (JNPR). He was CEO of graphics software company Macromedia before it was acquired by Adobe Systems (ADBE).
How good a pick is Elop considering that Nokia’s biggest needs are in developing software and apps stores to compete with Apple and Google, and coming up with as smart phone that will create some consumer buzz? Read more
Update Nokia (NOK)
The good news in Nokia’s (NOK) January 28 fourth quarter earnings report was that gross profit margin for its cell phones drove the company’s operating margin to 15.4% for the quarter.
Analysts have worried that Nokia’s operating margin was stuck in the current 12% to 14% range indefinitely. Nokia’s operating margin was just 9.8% in 2008 but 15.6% in 2007.
The bad news is that the improvement may not be sustainable. Read more
Head to head: Apple versus Nokia. Which is the better stock to buy?
Apple (AAPL) crushed Wall Street estimates when it reported earnings on July 21. Earnings per share for the company’s fiscal third quarter grew 13% from the third quarter of 2008. Revenue grew by 12% in a quarter when almost no company is reporting any sales growth.
Nokia (NOK), on the other hand, stunk up the joint with its second quarter results announced on July 16. Earnings per share did meet expectations but that was the last piece of good news that the cell phone maker delivered. Revenue missed projections by 3.8% and plunged 24.6% from the second quarter of 2008. Unit volume fell 15% from the second quarter of 2008. And the company took back its forecast that it would pick up market share in 2009. Now Nokia is saying its share will stay flat this year.
So which of these two stocks is a better buy? It’s not as easy a decision as it looks. Read more
