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Two analysts upgrade Nokia in wake of restructuring

Posted: , by Alan F.

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Two analysts upgrade Nokia in wake of restructuring
You don't have to be a stock market wiz to know that Nokia's shares have been on a sharply downward trajectory, losing 40% of its value over the last few months. Back in April, the stock made a 16 year low and has fallen further since then. And the company's stock has become easy to manipulate. For example, On June 8th 2011, rumors that Samsung was buying Nokia sent the stock sharply higher. Those who propagated the rumor decided to try again this year because the same rumor was floated exactly one year later to the day. But to show you the damage that the company has suffered in the last 12 months, Nokia's market cap (value of shares multiplied by shares outstanding) dropped from $24 billion in 2011 to $11 billion this year.

On Friday morning, Nokia announced a major restructuring of the company that included things like a 10,000 cut in head count, closing key manufacturing facilities and a broadening out of  the price range of the Nokia Lumia line by adding new models. In an effort to turn the company around, Nokia apparently will go against its first instinct not to sell the Nokia 808 PureView camera with its 41MP camera in the States. The Finnish handset maker has cleverly teased this announcement since Friday evening and the announcement is expected Monday.

The Nokia Lumia 900 has put the Finnish manufacturer back on the map

The Nokia Lumia 900 has put the Finnish manufacturer back on the map

But more than one specific phone, it is the restructuring that seems to have caught on with Wall Street. Some analysts think the actions disclosed in its announcement could save Nokia $2 billion by the end of 2013. Oppenheimer analyst Ittai Kidron upgraded the company to "Perform" from "Underperform," Wall Street code meaning "Buy" from "Sell". Kidron says that the job cuts will help Nokia buy some time as he believes that it will be the company's Windows Phone 8 models that will determine if Nokia survives long term. He sees this year as being tough for Nokia with 2013 being an "unknown path".

Zahid Hussein, an analyst for Citi, raised his rating on Nokia's shares from "Sell" to "Neutral" saying that Nokia's restructuring was "painful but necessary." He said that the company could return to breakeven by this year's third quarter, faster than expected, if it can successfully cut costs. The stock closed in the U.S. at $2.48 on Friday, up 13 cents or 5.5% on the day. The 52 week high is $7.38.

Meanwhile, in the debt market, Moody's became the third credit rating agency to take its rating on Nokia's debt down to "junk" bond levels. Moodays cut its rating from Baa3, the lowest investment quality rating, to Ba1 and left its outlook to negative meaning that the next move on its debt will probably be another downgrade.

source: AP via WMPoweruser

The last 5 years have been all downhill for Nokia's stock

The last 5 years have been all downhill for Nokia's stock


39 Comments
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posted on 16 Jun 2012, 20:22 12

1. smarteranalis (Posts: 3; Member since: 16 Jun 2012)


That analyst should read this before make that prediction:
communities-dominate.blogs.com/brands/2012/06/what​-do-we-now-know-after-nokias-latest-profit-warning​-layoffs-the-titanic-deck-chairs-moment.html

from that link:
I have a question for you. How many times do we get to hear Nokia CEO Stephen Elop say "its more challenging than I had expected" and "the sales channel is not supporting our products" and "I can't give you a long term outlook" in reporting these profit warnings and every more disasterous Quarerly results, that his claim of "we are proceeding well along our strategy" starts to sound hollow. At what point does the CEO lose his credibility.

I think Elop lost his credibility yesterday. I will tell you why, and its that tired cliche of the Captain of the Titanic rearranging deck chairs while his ship is headed at the visible ice berg. But lets not go there yet. Lets first review what we now know that we did not know yesterday.

HUGE LAYOFFS

Nokia announced 10,000 layoffs. I am very sorry for my many Nokia colleagues and friends who are now involved or fear that they might be losing their jobs. 3,700 of the jobs will be lost in Finland, and announcing this right before Juhannus, the midsummer celebration and start of Finnish summer holiday season - recognizing, Nokia had not told the labor unions about these coming layoffs, so they now start the negotiations of how to fire 3,700. That means many of the people who do lose jobs, will find out when they come back from vacation. And how many is that? I think Nokia has about 15,000 people employed in Finland now, so it would be about one in four who will lose their jobs. Happy holidays indeed. What a cruel way to deliver the devastating news.

The layoffs will hit globally about 1 in 5 Nokia employees. Think about that. It means that as an average, everyone who works at Nokia will know very closely several people who will be fired. This will be a huge blow to the morale of those left at Nokia. And like someone mentioned at Twitter, this is very cruel at those who had listened to the new CEO last year in February, and took the jump with him, off the "burning" platform and into the icy waters. Now it looks like the CEO got out of the water, got himself a rifle, and starts to shoot into the water, to kill any Nokia employees he can find who hadn't drowned yet.
..................................................​..............................

posted on 17 Jun 2012, 00:23 1

10. gener3l (banned) (Posts: 9; Member since: 17 Jun 2012)


my god you are annoying

posted on 17 Jun 2012, 01:35 2

14. AhmadAlsayegh (Posts: 253; Member since: 18 Jul 2011)


as someone who is studying Strategic Management, if Nokia is restructuring, then this means only one thing, Nokia is adapting a strategy change.
when a company restructures, then this means the are restructuring so their structure supports their new strategy...take this example:

imagine a team of doctors trying to transplant you 2 legs, that can run 10 times faster than you can now. let us imagine they have succeeded in this transplant, what do you think is going to happen now??

if the current structure of the body (heart, brain, other body parts) does not support the new strategy which is to bring in the new set of legs so you can run 10 times faster, then the legs are just going to be as good as your old normal legs! because, for instance, your heart is not supplying enough blood to those new legs.

now from the above, I say Nokia is having a new strategy, and they need their structure to adapt the new strategy as fast as they can; especially that this is a fast pace market. otherwise, they will be eaten alive

posted on 17 Jun 2012, 04:56 4

16. TROLL (banned) (Posts: 4851; Member since: 13 Apr 2012)


Stephen efop has taken the company so low since he took
over ... they should fire him...

posted on 17 Jun 2012, 05:32 1

17. Veigald (Posts: 229; Member since: 13 Jan 2012)


It is hardly a secret that Tomi Ahonen hates Nokia and their new direction, and he has severely discredited himself by manipulating statistics etc. Nokia were complacent for far too long under previous management, which makes the current turnaround tougher. The turnaround is in every way necessary and although difficult now, quite definitely the best way forward.

posted on 17 Jun 2012, 10:04 1

24. elopsucks (Posts: 3; Member since: 17 Jun 2012)


Ahonen were a reputable analyst.
He's the only one that can predict nokia will be this low...
He's the one that really know inside nokia

and he said... elop has screwed nokia.

posted on 17 Jun 2012, 13:28 1

30. Veigald (Posts: 229; Member since: 13 Jan 2012)


Don't be so naive and uncritical to people like Ahonen. He is discreding himself with all the misused statistics, omitted facts and one-sided references.
Did you for instance read his "report" from the shareholder meeting, a meeting he did not even attend but "referenced" from across the globe? His report was completely ridiculed when actual transcripts from the meeting were released. Not that Ahonen is capable of admitting any wrong-doing, of course.
Check Ahonens' version of this for yourself here:http://communities-dominate.blogs.com/brands/2012/05/what-do-we-now-know-after-nokia-shareholder-meeting-that-the-future-is-far-worse-than-we-thought.html

And the notes from someone who was at the shareholder meeting:http://mynokiablog.com/2012/05/04/mnb-reader-generated-fact-checking-what-was-said-at-nokia-agm/

And "Elop screwed Nokia"? Do you really think Elop has the power to do as he wants?
Elop was brought in by the board to turn the company around, when the board finally realized what a mess the company was in after years of complacency and cashing in without developing for the future. Check out comments by the current and on-boarding chairman on this and the new direction.

If you don't know enough about business to understand basic things, I suggest you wait until you get into your teens to comment on them.

posted on 17 Jun 2012, 15:55

31. lubba (Posts: 1310; Member since: 17 Jan 2011)


Expect results overnight. I don't see anybody pissing off at RIMs new CEO. Its just all techie fanboy behavior.

posted on 16 Jun 2012, 20:23 4

2. smarteranalis (Posts: 3; Member since: 16 Jun 2012)


What Do We Now Know, after Nokia's Latest Profit Warning & Layoffs - The Titanic Deck Chairs Moment

I have a question for you. How many times do we get to hear Nokia CEO Stephen Elop say "its more challenging than I had expected" and "the sales channel is not supporting our products" and "I can't give you a long term outlook" in reporting these profit warnings and every more disasterous Quarerly results, that his claim of "we are proceeding well along our strategy" starts to sound hollow. At what point does the CEO lose his credibility.

I think Elop lost his credibility yesterday. I will tell you why, and its that tired cliche of the Captain of the Titanic rearranging deck chairs while his ship is headed at the visible ice berg. But lets not go there yet. Lets first review what we now know that we did not know yesterday.

posted on 16 Jun 2012, 20:24 3

3. smarteranalis (Posts: 3; Member since: 16 Jun 2012)


HUGE LAYOFFS

Nokia announced 10,000 layoffs. I am very sorry for my many Nokia colleagues and friends who are now involved or fear that they might be losing their jobs. 3,700 of the jobs will be lost in Finland, and announcing this right before Juhannus, the midsummer celebration and start of Finnish summer holiday season - recognizing, Nokia had not told the labor unions about these coming layoffs, so they now start the negotiations of how to fire 3,700. That means many of the people who do lose jobs, will find out when they come back from vacation. And how many is that? I think Nokia has about 15,000 people employed in Finland now, so it would be about one in four who will lose their jobs. Happy holidays indeed. What a cruel way to deliver the devastating news.

The layoffs will hit globally about 1 in 5 Nokia employees. Think about that. It means that as an average, everyone who works at Nokia will know very closely several people who will be fired. This will be a huge blow to the morale of those left at Nokia. And like someone mentioned at Twitter, this is very cruel at those who had listened to the new CEO last year in February, and took the jump with him, off the "burning" platform and into the icy waters. Now it looks like the CEO got out of the water, got himself a rifle, and starts to shoot into the water, to kill any Nokia employees he can find who hadn't drowned yet.

But the layoffs were totally expected. As Nokia's Q1 results were so horrid and the sales kept falling for five consecutive quarters since Elop's Burning Platforms memo (the costliest management memo of all time) of February 2011 - as the company total sales fall, and the company is already unprofitable, there have to be cuts. The easy cuts had been made already, now it means deep, painful cuts. And it looks like Elop thinks one in five Nokia still-remaining employees must be fired now, just for Nokia to continue on.

The layoffs may help some Nokia investors trust the stock price but I think these cuts are now far too deep, gone on far too long, cutting into the meat of what was left of the strong base of Nokia. There is no fat to trim. Nokia cannot cut itself into a winner. This is the wrong path. But I am not the CFO, I have not seen the internal numbers and it really isn't even the point. Lets get to the Captain and his actions.

posted on 17 Jun 2012, 07:25 1

18. Veigald (Posts: 229; Member since: 13 Jan 2012)


1 in 5? That does not compute. Nokia has about 120000 employees, so 10000 jobs cut would be 1 in 12. But then again, Tomi Ahonen likes to come up with creative arithmetics to keep slandering Nokia.

posted on 17 Jun 2012, 10:05 1

25. elopsucks (Posts: 3; Member since: 17 Jun 2012)


you're playing with words,
go to his blog if you want the truth

posted on 17 Jun 2012, 13:20

29. Veigald (Posts: 229; Member since: 13 Jan 2012)


Playing with words? Please demonstrate to me how 10000 jobs out of 120000 is 1 in 5, please.

posted on 17 Jun 2012, 16:07

32. lubba (Posts: 1310; Member since: 17 Jan 2011)


Millions of layoffs worldwide due to economy but not ok for Nokia to layoff 10,000 to save the more than 10,000 employees or even save the company. It sad but probably has to be done. Of course though if Nokia is building new facility in Asia, there'll be hiring. You'll probably argue on this one but hey how do you think Apple saved billions and they wouldn't even pay better wages to those people. So what they, employees commit suicide by jumping off buildings.

posted on 16 Jun 2012, 20:30 2

4. snowgator (Posts: 3196; Member since: 19 Jan 2011)


Sobering to think people's livelihood have to be taken away for Nokia to improve.

posted on 17 Jun 2012, 08:02 1

20. ron1niro (Posts: 54; Member since: 28 Mar 2012)


And what happens if Nokia improves? People get hired again right? So, it makes sense for them to shed a little bit of their workforce in order to keep the company afloat. Also, we should remember that Nokia is taking a new direction with windows phone. People who cannot serve well in this new strategy have to be let go. I believe that Nokia will generate more money in q3 and q4 of this financial year because they released more phones than last year and these phones have been selling pretty well. The new Asha's with qwerty will also sell well in other parts of the world than US. The more phones Nokia makes and the more available they are made to the consumers, the more they will sell. in most parts of the world apart from the US and some parts of Europe, Nokia is still the favorite even though Samsung has overtaken them as the number one manufacturer in volume. This is because when someone is tired of their first phone which in most cases is a nokia and they want an upgrade, Nokia had nothing to offer however, with this new operating system (WP), they are heading in the right direction.If WP8 improves on WP7, i bet my foot we will see Nokia go back to number one in less than 2 years because i can say this with no fear, very, very, very few people will choose Samsung over Nokia on windows phone. But more important than that, windows phone has to gain more market share first.

posted on 17 Jun 2012, 10:06 3

26. elopsucks (Posts: 3; Member since: 17 Jun 2012)


wp7 sucks big time
it won't improve
microsoft is a joke

posted on 17 Jun 2012, 16:14

34. lubba (Posts: 1310; Member since: 17 Jan 2011)


You mad bro?

posted on 17 Jun 2012, 18:28

37. TROLL (banned) (Posts: 4851; Member since: 13 Apr 2012)


True...

posted on 17 Jun 2012, 16:10

33. lubba (Posts: 1310; Member since: 17 Jan 2011)


Yep, sad for the other thousands companies who have already done it or will be.

posted on 16 Jun 2012, 21:25

5. nyuvo (Posts: 72; Member since: 10 May 2012)


"Back in April, the stock made a 16 year low and has fallen further since then. And the company's stock has become easy to manipulate."

Should be just one sentence. News articles should never have a sentence starting with "and".

posted on 17 Jun 2012, 09:39 1

21. tegradragon (Posts: 68; Member since: 23 May 2012)


Seriously? You're worried about grammar?

posted on 16 Jun 2012, 22:44 1

6. guildsa654 (Posts: 27; Member since: 12 Apr 2012)


WAIT WUT?

posted on 16 Jun 2012, 23:04 5

7. Bluesky02 (Posts: 1439; Member since: 05 Dec 2011)


Sad, wondering if the company will be closed.

posted on 16 Jun 2012, 23:35 8

9. dickwyn (Posts: 579; Member since: 07 May 2012)


i will be so devastated if nokia goes down one day =(

posted on 17 Jun 2012, 09:40 1

22. tegradragon (Posts: 68; Member since: 23 May 2012)


It just shows that ANYthing can happen in the corporate world. :(

posted on 16 Jun 2012, 23:34 3

8. ryq24 (Posts: 474; Member since: 17 Oct 2011)


This make me re-think if i should go ahead and buy a nokia lumia phone because their even saying that nokia might go bankrupt next year if microsoft or other companies don't buy them out. Poor nokia. Anyway, there's always samsung or htc or sony.

posted on 17 Jun 2012, 00:24 6

11. gener3l (banned) (Posts: 9; Member since: 17 Jun 2012)


quit trying to bash Nokia, fandroid in disguise.

posted on 18 Jun 2012, 01:34

39. Whateverman (Posts: 3187; Member since: 17 May 2009)


Are you saying you can't be both an Android fan and a fan of Nokia? How very narrow minded of you.

posted on 17 Jun 2012, 01:25 2

12. Shinobi77 (Posts: 5; Member since: 06 Jun 2012)


its not bashing its the truth u dumb ***. Nobody is bashing nokia but it's the truth nokia is going under everybody has to smell the coffee. I have always been a nokia fan but i wont go buy a nokia now if their closing cause it means no more support for their phones just like Sony Ericsson and Soon it will be RIM's turn too

posted on 17 Jun 2012, 01:30 1

13. andrew1953 (Posts: 174; Member since: 13 Nov 2011)


RIM and NOKIA are both in difficult territory,both hoping their next phones (BB10 and Win 8) will get them out of the pooh. Is there room in the market for both to stage successful comebacks? I hope so- love 'em both. Have most invested in RIM.

posted on 17 Jun 2012, 16:23

35. lubba (Posts: 1310; Member since: 17 Jan 2011)


Anything can happen. Look at it this way. Everyone discounted the Xbox when it first came out. They even puked at the Kinect! Look at where these two products are now. its good to see anal-ysts and fanboys choke on their negativity.

posted on 17 Jun 2012, 01:52 2

15. microsoftnokiawin (Posts: 890; Member since: 30 Mar 2012)


Stephen Elop mistake he doesn't wan't admit his wrong so instead of stopping and turning back he's just walking into the fire if he starts rethinking
and starts developing MeeGO and Symbian (burning platform) they would have a better chance of surviving

posted on 17 Jun 2012, 07:29 1

19. Veigald (Posts: 229; Member since: 13 Jan 2012)


You don't really know much about how these things work, do you?

First of all, Elop is not God. He only acts on what the board (which includes him) sets out as a strategic direction. Companies are never run by one person (not even Apple was).

Second, a turnaround like this takes years. And painful years at that.

Third, Nokia cannot change its mind about this turnaround once it has begun. If they announced that they would stop this turnaround and go for MeeGo and Symbian (or Android even), the stock would literally be worthless, as no investor would have any confidence in the company.

In the first or second quarter of 2013 we will see where this leads Nokia. Until then, we can only hope for Nokia's sake that WP does well and that full touch Asha stems the emerging market losses.

posted on 17 Jun 2012, 13:16

28. kanagadeepan (Posts: 638; Member since: 24 Jan 2012)


Agree El0p is NOT god, he is a dem0n... He is a Tr0janH0rse... He is the reason for the current very BAD condition of N0kia...

Do u think, a good CEO will say "WE WILL NEVER DEVELOP MEEGO, even if N9 sells well....", only a Tr0janH0rse will say... And then keeping the price of N9 too high (why he sell Lumia900 cheap in US???) and NOT introduce in markets where it will sell well...

But all is OVER now, even GOD can't save N0KIA now... I feel sorry for them...

posted on 17 Jun 2012, 09:43

23. tegradragon (Posts: 68; Member since: 23 May 2012)


Please people buy Nokia!! Lumia isn't bad you know? Lets not let a company like THAT go extinct! Anyone?

PS- Just kidding. You can buy whatever you want.

posted on 17 Jun 2012, 11:47

27. Bluesky02 (Posts: 1439; Member since: 05 Dec 2011)


@Veigald
Agree with you

posted on 17 Jun 2012, 16:38

36. lubba (Posts: 1310; Member since: 17 Jan 2011)


Fanboys will always be fanboys. Even if elop turns the company around, they will still be spazzing like a brat child. I wanted meego, I wanted Symbian, I wanted android. There's no winning these people. But that's ok. They are not the bulk of what makes a product successful.

posted on 17 Jun 2012, 21:15 1

38. Mube1 (Posts: 153; Member since: 22 Sep 2011)


Its all happen just bcoz of os selection,android was the best option for nokia instead of windows.

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