Print 66 comment(s) - last by Flunk.. on Aug 10 at 9:02 AM

Nokia still has a lot of cash, but does it have the drive to get out of this slump?

Nokia Oyj. (HEX:NOK1V) took way too long to release its first Windows Phones.  But the results -- like the Lumia 900 LTE -- looked distinctive, lending hope that the phonemaker's approach was merely meticulousness, not sloth.  Initial sales of the Lumia 900 looked promising.

I. Nokia's Recovery Stalls in Q2 

But the wheels fell off the train somewhat in the last quarter.  Sales stalled to 600,000 units in the U.S., including 330,000 Lumia 900s.  That's down 60 percent in unit sales since last year.  And it's way off the roughly 6 million units Nokia moved per quarter in 2006.

One factor slowing sales may be the recent announcement that there will be no full upgrade path for Windows Phone 7 devices to Windows Phone 8.

Revenue wasn't quite so bad for the North American region, as the higher revenue from the Lumia 900 and other models offset lower sales.  But globally the financials were quite bad as well.  Writes Nokia, "All regions showed a significant year-on-year decline in the second quarter 2012 except for North America where the sharp decline in sales of Symbian devices was more than offset by sales of our Lumia devices."

Globally, Nokia sold 4 million Lumia Windows Phones.  That means that roughly 40 percent of Nokia's 10.2 million smartphones sold are Windows Phones.  The rest are the soon-to-be defunct Symbian.  

Nokia white Lumia phones
Nokia's stylish Lumia Windows Phones have been unable to right Nokia's ship, thus far.
[Images Source: Engadget]

Those numbers reflect on just how lackadaisical Nokia's transition pace remains.  It's been nearly a year and a half since Nokia announced that it would be moving entirely to Windows Phone.  A year and a half later it's not even halfway there.

Overall feature phone sales did manage to grow slightly jumping from 71.8 million units last year to 73.5 million units.  Still, Nokia now trails Samsung Electronics Comp., Ltd. (KSC:005930) in feature phone sales.

Losses for the quarter tucked in at €826M ($1.01B USD) on revenue of €7.52B ($9.22B USD).  Sales were down nearly 20 percent since last year, while the loss almost doubled.  Nokia has committed to big layoffs to try to offset the sinking sales.

With money losses mounting and the Windows Phone transition far from over, all three major credit agencies have downgraded Nokia's credit to "junk" status.  Nokia is only fortunate that it is sitting on a pile of cash -- €3.5B ($4.29B USD), to be precise.  That's slightly more of a cushion than some struggling rivals like Research in Motion, Ltd. (TSE:RIM) have.

All of this is the same old story for Nokia and none of it is terribly surprising.  The company is still lingering around, but the concern is that after a couple of intriguing device announcements, it seems back to its old ways, continuing its slow slide down the hill.

II. Nokia Almost Released iPhone, iPad Look-Alikes in 2000

About the most interesting thing to come out of the earnings hoopla was a report in The Wall Street Journal, which released details of an iPhone and iPad-like device developed by Nokia researchers in the 1990s, but never released.  The smartphone had a color touch-screen at a time when most phones were keyboard-driven units with tiny black-and-white pixel displays.  And most notably it had a single round button beneath the touch-screen -- just like the iPhone.
Apple iPhone
Nokia reportedly was testing a device nearly identical to the iPhone, seven years before Apple. [Source: David Paul Morris/Getty Images]
Likewise Nokia had a tablet computer that was built around a large touch screen and a wireless connection.  Unlike many other Windows tablets of the time it lacked buttons.

Nokia may deserve some credit for conceiving the iPad and iPhone designs over seven years before the original iPhone, but it has no profits to show for that creativity.  About the only positive value to come from the innovation was a $6B USD trove of patented ideas, most of which Nokia never succeeded in bringing to market.

Comments CEO Stephen Elop, "If only they had been landed in products.  I think Nokia would have been in a different place."

Instead he's left to ponder selling some of those memories of past innovation squandered to try to stay afloat.  Nokia is also actively suing rivals to try to generate revenue.

Source: Nokia

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By Iketh on 7/19/2012 3:24:56 PM , Rating: 2
My opinion is the slow down is due to no upgrade to Windows 8... are the losses in sales less than what it would cost to test on Lumia 900?

RE: ...
By sprockkets on 7/19/2012 3:32:46 PM , Rating: 2
Then again, how many informed people knew that, or were waiting for that information?

Does it even matter? 7.8 pretty much gives WP8 without the new kernel. Not as if it is a big loss.

However, only 330k 900s and only sold for free/$100 and now $50? Sold or not, that doesn't give them much profits. And their mistake at launch cost them what $100 as well?

RE: ...
By jnemesh on 7/19/2012 3:45:44 PM , Rating: 2
Does it matter? HELL YES! The uninformed customer MAY buy one of these paperweights, they may miss that it will not be upgradable for NOW...but when they hear about apps, and find that they cant run them on their BRAND NEW PHONE, they will be pissed!

RE: ...
By jonmcc33 on 7/19/2012 3:49:16 PM , Rating: 2
I have an HTC Arrive running WP7.5. I want to break my contract. I hate that Windows Phone has nothing in terms of apps. I might put up with it for a few more months before terminating my contract.

RE: ...
By Myrandex on 7/19/2012 10:25:28 PM , Rating: 3
yea man I hear you, I can't find anything out there. 100,000? Pffft I need 1,000,000 to get by.

Sarcasm aside, there are a couple I feel that I'm missing that I desire. I would like a chase mobile banking app (which is announced as coming), a dish network app, bejeweled blitz (I have the regular one), and an official gmail app. That's about it from my iPhone that I use on a regular basis that I would like on my Lumia.

RE: ...
By Myrandex on 7/19/2012 10:27:04 PM , Rating: 2
Oh and all honesty, I was hoping so hard for an HTC 7 Pro to be compatible with US 3G GSM networks. That phone looked amazing, the true phone upgrade from the Touch Pro 2. I've never found a phone with a keyboard as good as the Touch PRo 2's, even in Android land. Unfortuately moving to CDMA was enough of a negative to prevent me from snatching up one of those.

RE: ...
By sprockkets on 7/19/2012 6:30:05 PM , Rating: 2
That doesn't answer why they have poor sales...

RE: ...
By Flunk on 7/19/2012 4:29:35 PM , Rating: 2
It will make a big difference when the Windows Phone 8 exclusive apps start to launch, shortly after Windows Phone 8 launches.

RE: ...
By Mitch101 on 7/19/2012 4:25:35 PM , Rating: 1
Im surprised there isnt a slowdown but I bet some are waiting knowing 8 is around the corner

Nokia: Windows Phone 8 announcement did not affect Lumia sales, WP7 sales will continue well after the introduction of WP8

The good news going forward is, consistent with our own findings, that the announcement of a lack of a Windows phone upgrade has not affected Lumia sales negatively, with Stephen Elop at a Nokia investor call quoted as saying today, ”Lumia activations were flat to up in the weeks following Windows Phone 8 announcement.”

RE: ...
By NellyFromMA on 7/19/2012 4:50:18 PM , Rating: 2
No sense offering an upgrade for a hardware platform that has no chance of running acceptably on it when you need a slam dunk to stay up. It makes no sense to shove WP8 on WP7 devices. They are similar in name alone.

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