It’s a lovely day in Espoo, Finland – 64 degrees and breezy, as the region enjoys 19 hours a day of sunshine. The atmosphere is frostier in the HQ of Nokia, though, as the world’s largest maker of mobile devices considers the stunning erosion of its once-dominant position in the cell phone industry.
After announcing a lower-than-expected revenue forecast for the rest of 2010 on June 16, Nokia saw its share price plummet by 10 percent. The stock has lost 44 percent of its value since April 1, causing even previously bullish analysts and investors to head for the exit. This week Charter Equity Research analyst Ed Snyder, long a Nokia optimist, dropped his rating on the stock after the Finnish handset giant’s revenue warning this week.
“We have long maintained that the company’s ponderous corporate culture would eventually find its footing,” wrote Snyder in a research note, according to Tech Trader Daily, “but with competitors attacking fiercely at both the low and high end, deterioration in its core European market, and a lengthening timeline for Symbian 3, which may not live up to expectations anyhow, shares will plunge well below recession lows.”
That’s a harsh assessment for a company that once seemed to poised to help lead the mobile and wireless industry into a new future of wireless broadband and powerful multimedia phones. Nokia has been beset by a host of forces that includes the rising popularity of smartphones (where Nokia has been slow off the mark), low-end competition from not only traditional rivals, like LG and Samsung, but also new Chinese vendors, and of course Steve Jobs’ juju. Ushering in a new era of applications-rich, touch-screen devices the iPhone has made much of Nokia’s product line look quaint. Research firm IDC released a report last month showing that, even as global smartphone sales rose 57 percent in the first three months of 2010, Nokia’s market share was flat at 39 percent while the iPhone climbed to 16 percent, from just 11 one year ago. The startling advance orders for the iPhone 4 have caused investors and analysts to wonder if Nokia can recover from its current dilemma.
There’s an irony to this, of course: Nokia pioneered the smartphone category with small, Web-capable devices like the N810 Internet Tablet. Later this year Nokia will release the latest in the N series, the touch-screen N8. The N8 has received mostly favorable, if not dazzled, reviews from the device-geek blogs. Many observers, however, believe that it’s late in the game to be bringing out an iPhone competitor even as popular devices based on the Android OS, from Google, are filling retail shelves. A single device is not going to save Nokia.
