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Nokia expected to swing into loss in Q2, “worst-case scenario is crystallizing”

Posted: , by Victor H.

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Nokia expected to swing into loss in Q2, “worst-case scenario is crystallizing”
Nokia, the world's biggest handset maker, has seen its shares nosedive like virtually no other company in the mobile industry. But it's sales that really matter and the general public sees no light at the end of the tunnel at least for the next two quarters. A recent Reuters poll showed that Nokia is expected to swing in the red in the next two quarters and the future is murky at best. 

The fourth quarter of the year is the earliest when the Finns could start recovering and register a profit, but don't expect it to be huge. "We believe the new guidance ... is a strong indication that our worst-case scenario for the company, of accelerating market share and gross margin decline, is crystallizing," Bernstein analyst Pierre Ferragu said recently.

But what's in danger is not just profits – it's the whole idea of a “three-horse race” - a key concept in Nokia CEO Stephen Elop's vision. The ex-Microsoft employee was accused of being a trojan horse for Redmon and purposefully announcing the transition to Windows Phone a whole year before a product could be delivered only to bring down the value of the company. But the reality of Nokia's situation is that the company is in dire straits after dramatically losing both value and customer approval.

Former Nokia employee and industry analyst Tomi Ahonen has mentioned that even the first quarter results of the company were hiding the horrid message about what's to come as while the overall decline in Espoo's market share was only 14%, it was mostly due to seasonal sales in China which celebrates New Year then. Sales were in shambles everywhere except the Asian country and if you factor the Chinese market out, you arrive at a 28% decline in a single quarter.

But even if Nokia survives to release its Windows Phone portfolio, question remains about how the Nokia Windows Phone will be received as initial response to Microsoft's platform in the States was lukewarm. More and more analysts see the only salvation in firing Stephen Elop and changing the course back to Symbian, but the past three months have virtually burned the way back. Do you have any suggestions about what Nokia should do to survive given the latest data? Feel free to discuss them in the comments below!

  • Options

posted on 10 Jun 2011, 09:51 2

1. Droid_X_Doug (Posts: 5993; Member since: 22 Dec 2010)

Change course to Android?

posted on 10 Jun 2011, 10:26 1

6. jroc74 (Posts: 6019; Member since: 30 Dec 2010)

Yea..it wouldnt have hurt to have an Android phone too. Ask HTC and Samsung about that....

To make it even simpler for Noika, they coulda had an Android phone with stock Android this time, then have one with a skin later on if they chose to do so.

posted on 12 Jun 2011, 13:13 1

29. Lucas777 (Posts: 2137; Member since: 06 Jan 2011)

ya but android wont pay off that much... wp7 will have a huge payoff if it works... and i dont see why it wudnt... nokia hardware and an amazing software... they just need the marketing

posted on 10 Jun 2011, 09:56 2

2. Kyraa (unregistered)

Meego could help Nokia to build up a new reputation for good operating systems. Symbian is devil's work to smartphone enthusiasts, but Meego looks very promising amd I think Meego should Nokias way out of the crisis, not WP7. It would ne new and refreshing and would settle all rumors about Nokia taken over by MS.

posted on 10 Jun 2011, 10:14 2

3. Bob (unregistered)

Push the phones out faster ... 4 months is NOT "in the near future" as the last presentation of Mango quipped. The OS, otherwise, looks great but things need to hurry up!!!

posted on 10 Jun 2011, 10:17 3

4. vishu9 (Posts: 252; Member since: 03 Mar 2011)

stick to the current course of action and slog their asses off to make it work! thats their only way forward!

posted on 10 Jun 2011, 10:25 1

5. jroc74 (Posts: 6019; Member since: 30 Dec 2010)


posted on 10 Jun 2011, 10:36

7. WirelessCon (Posts: 311; Member since: 11 May 2010)

So, how many Nokia employees are thinking about moving to South Korea?

posted on 10 Jun 2011, 11:32 1

9. Ty (unregistered)

Stop making crappy phones and get away from Windows!

posted on 10 Jun 2011, 12:13

10. ex-nokia fanboy (unregistered)

they need to give better support to their customers. the N8 is plagued with problems. i have my unit for less that 2 months and it has defect. they don't want to repair it. i'm very disappointed. i argued with them for 2 hours and all they could say is "sorry for taking up your time goodbye"

posted on 10 Jun 2011, 13:02

11. ottscay (unregistered)

Honestly, they largely screwed themselves by announcing they were EoLing Symbian so long before they could get WinPho handsets to market. They also failed to grasp why WinPho isn't catching on - it's not a lack of quality hardware, it's an utter lack of mindshare. It's a nice enough OS, but it offers too little too late and will always be playing catch up to iOS and Android.

At this point...ugh, they have almost no good options. They can't un-EOL Symbian...that will seem like a transparent ruse at this point. They could adopt Android, but I presume Microsofts bags o' cash (err, marketing dollars) are tied to exclusivity.

No, I think Nokia is screwed. To be honest, if Samsung was offering $25 billion for their phone division (and patents) they should jump at it now, as they'll be worth a lot less in November.

posted on 10 Jun 2011, 13:13 1

12. hepresearch (unregistered)

Option one: Nokia makes WP7 handsets and attempts to keep Microsoft in a "three-horse race"... WP7 undersells miserably, and Microsoft buys Nokia's remains for pennies on the dollar, all before the end of 2011.

Option two: Nokia's mobile device division gets bought by Samsung, their network division by Siemens, and their NAVTEQ assets by Google... all before the end of 2011... no "three-horse race", no more WP7, end of story.

Option three: Nokia's Board of Directors dump Elop on the doorstep of the orphanage for defunct CEO's, licenses webOS from HP, and makes a few webOS smartphones and tablets before going belly-up... either Huwaei or ZTE buys their mobile device division, Siemens buys their network equipment division, and Google buys their NAVTEQ assets. No "three-horse race", no more WP7 or webOS, all before the end of 2011...

Option four: Nokia's Board of Directors dump Elop on the doorstep of the orphanage for defunct CEO's, try to return to Symbian and Meego, and discover that all of their formerly-loyal customers are either gone or psyched-up for WP7. Sales plummet into oblivion... the board members empty the corporate treasury into their own pockets and try to escape from Helsinki, only to be caught and tried for theft and fraud... all before the end of 2011.

Option five: Elop holds a closed session for the Board of Directors... after two days, security guards force the board room doors open, and discover that Elop has used all of the board members in human sacrifices to a golden statue of Bill Gates...

Short version: Android and iOS will be the only two choices by 2012, and Nokia will be only a faint memory of good times long past... Nokia's business strategy since 2007 = corporate suicide... Nokia's management since 2007 = EPIC FAIL!

Oh, and by the way, which of the above options is your favorite?

posted on 10 Jun 2011, 14:34 2

14. snowgator (Posts: 3604; Member since: 19 Jan 2011)

Wow. Tons of faith in Nokia decision trust, huh? One of the more amusing posts of this calander year .....

posted on 10 Jun 2011, 15:43

15. hepresearch (unregistered)

I'm glad you found my post enjoyable. As much as I have liked Nokia's products, and as much as I have liked Symbian... well, until S60 5th Ed and Symbian^3... I must admit my great frustration with how things have gone over in Finland the last few years. Yes, I find that sarcasm helps me deal with the frustration, but sarcasm with a decent hint of symbolic truth can be priceless...

If Bill Gates is viewing my posts here, I can imagine that he is contemplating pressing the "Smite" key on his special keyboard right now... lol!

posted on 10 Jun 2011, 16:39 2

17. SemperFiV12 (Posts: 948; Member since: 09 Nov 2010)

Option 6: Nokia is successful with WP7. Use your immagination to determine the fate of Elop.

posted on 10 Jun 2011, 17:22

18. hepresearch (unregistered)

Is it possible? Absolutely! I would much prefer to see Nokia succeed with WP7 than to disappear completely... but is it likely? I think that is still quite debateable. I much prefer your "Option 6" to any of the other "options" that I posted in jest... and yet, there are so many factors involved that I must say it has yet to be seen. As always, hope for the best... but prepare for the worst. The optimism is refreshing, though!

posted on 12 Jun 2011, 20:00 1

30. fairly_mismatched (unregistered)

Nokia could prouce the highest quality hardware on the planet, and WP7 could prove to be it's software soulmate and it still may not make a difference. The problem for Nokia isn't what they can bring to the table, but instead what the majority of consumers want on the menu. Right now thats either iOS or Android. People just seem to naturally polarize things down to the fewest choices if given the time to.
I'd love to see a competitive market but Nokia is going to have to embark on some brillint marketing with absolutely no technical hiccups to win consumer mindshare.

posted on 10 Jun 2011, 13:19 3

13. rafael.roque (Posts: 78; Member since: 03 Jul 2010)

Ironically Symbian activity is on the rise. Symbian is a great OS, it was the top Management that didn't handle it properly and slowed it down... And This Stephen Elop is no different; he doesn't understand that Nokia is different and not neccessarily bad. To each their own, and to me and all Nokia users; Symbian is our choice of OS. I'm telling you all right now, this Windows transition is only trouble; Elop either leaves Microsoft or leaves Nokia. He should go back to Microsoft if he doesn't like Nokia and Symbian!

posted on 10 Jun 2011, 15:52 1

16. Master Blaster (unregistered)

Looks like Nokia has officially become an "acquisition target".

posted on 10 Jun 2011, 18:11

19. William22 (unregistered)

Fire Elop and begin producing Android, now!!!

posted on 10 Jun 2011, 20:00 1

20. Fedback (unregistered)

I have always been a Nokia Fanboy, I am using an N8 right now. But I'll bet you my house that Nokia would need at least 18 months to release an Android phone that even comes close to the Galaxy S II. Moving to Android is not an option

posted on 10 Jun 2011, 21:37

21. ChiX017 (unregistered)

Not after Samsung turned them down the 1st time, i use an N8 too n i knw MicroNok prepared 4 the worst from the beginning.
Right now i've got high hopes for their windows phone being released on the 27th of this month.

posted on 11 Jun 2011, 17:49 1

24. box (unregistered)

I think ios will die out before Symbian... at least Nokia updates their UI every so often, rather than just adding stolen elements from other OSes

posted on 12 Jun 2011, 00:11

27. hitesh (unregistered)

go for android........and i can bet nokia will stood first again like before..............

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