Dark clouds are gathering over Nokia, once the world’s leading producer of mobile phones and now miserably trailing the field as an also-ran with a dubious future – unless Microsoft (the most likely buyer) decides to take it over.
Nokia, – still independent, still based in Finland, but with a former Microsoft executive in charge – yesterday announced its third-quarter financial results, showing the number of handsets it sold in the quarter were down by 22 percent compared to Q3 last year.
This came at a time when mobile phone sales were booming across the world – but with Apple’s iPhone and Samsung’s Galaxy models picking up most of the lucrative smartphone sales.
Not only did Nokia sell 22 percent fewer phones: its revenue in the quarter was also down 19 percent or 7.24 billion euros ($9.48 billion.
The Finnish mobile maker posted an operating loss of 576 million euros (A$728 million) for the quarter, its sixth consecutive quarterly loss. But it’s not short of cash – it has 8.8 billion euros, or about a$11.1 billion, in the bank, which might make it a more attractive takeover target should management led by Stephen Elop decide to take that course
On the other hand, it may choose to battle on. In coming weeks, Nokia’s new Lumia 820/920 line, which is powered by Microsoft’s Windows Phone 8, will begin selling in the USA.
But it would take an enormous turnaround to make a difference. Nokia sold just 6.3 million smartphones in Q3 – compared with the 5 million iPhone 5s Apple sold in a single weekend following that phone’s release.
Research firm Strategy Analytics said it expected Nokia to sell eight million smartphones in Q3 2012 – compared to Samsung’s 55 million and Apple’s 27 million iPhones.
Nokia, formerly the world’s top mobile phone maker, had hoped to stem the decline in smartphones through a partnership with Microsoft but this relationship became shaky when Microsoft chose HTC as their smartphone partner to promote their new Windows 8 smartphone OS.
The decision by Microsoft not to support Nokia came after the recently promoted Nokia Lumia 920 scored a lot of negative press when it was discovered that the demo videos and photos they had shown at their announcement event were actually taken using professional DSLR cameras to “simulate” the smartphone’s advanced optical features and were not shot using the camera as Nokia originally indicated.
Not only has Nokia lost out in the fierce top-end race, it is now also losing ground to Asian makers in lower-end devices and phones using Google’s popular Android platform.
Samsung overtook Nokia as the world’s No. 1 mobile phone maker in the first quarter, selling 86.6 million mobile phone against Nokia’s 83 million. Nokia had led the field for 14 years with global market share peaking at 40 percent in 2008.
Nokia has announced more than 10,000 layoffs this year in an attempt to reduce operating expenses by (EURO) 1 billion by 2013, and has said that it will continue with more cutbacks to make the company profitable again.