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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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Window Phone 8
By ctodd on 7/19/2012 3:41:08 PM , Rating: 2
Who wants to buy a WP right now when you are guaranteed not to get an update to WP8?! MS shot everyone involved in the foot when they decided to do that! At least with my iPhone, I'm pretty sure I will get several years of OS updates. I might loose a few features, but I get all of the updates until my phone is old as dirt. I have a Samsung Focus S as well, but I really just don't like it and prefer to use my iPhone. I was hoping to get WP8 to see if my opinion changed, but I'm not going to buy another phone to find out.

RE: Window Phone 8
By GotThumbs on 7/19/2012 3:56:42 PM , Rating: 2
Don't be too sure. The next phone won't even use the same adapters. Chock up more $$$ to buy and replace what you already be the first on your block.....again.

Apple knows its fan base will gladly spend money again and again for the same product in the same case...with a tweak here and there.

Best wishes to all those suckers. :->
I get a chuckle just thinking about how stupid people are and how quick they are to give their money away. It's like a compulsive gambler. In the end, ts their money so carry on.

I'm good with my Droid phone and don't plan to upgrade for sometime. It does exactly what I needed and wanted. $30.00 for 1200 min, 3000 txt and 100meg of data...and no contract. I like keeping my money in my own pocket thank you.

Who was it that said a sucker is born every minute? I can see that's not far from the truth.

Best wishes,

RE: Window Phone 8
By Chaser on 7/22/2012 1:06:44 AM , Rating: 2
Whether it's voluntary or by choice just because you triumphantly choose to live in the stone age with your whole 100MB of data doesn't make anyone else that has the purchasing power to own a phone that was built after 2009 a reckless idiot.

More power to you if you gain happiness living like Ebeneezer Scrooge to get your sanctimonious thrills.

Best wishes.

RE: Window Phone 8
By NellyFromMA on 7/19/2012 4:54:02 PM , Rating: 1
Cause that didn't happen when Andoird went from 2.2 to 3.0 or phones from 2.2 to 4....

I guess im not surpised by the double standard, just bored of it.

I guess you CAN have it both ways, but no one is going to take you seriously for it. Other than fan boys I guess.

Explain how Android major released are ANY different?

RE: Window Phone 8
By chripuck on 7/19/2012 5:51:48 PM , Rating: 2
It's dictated by the hardware manufacturer and not the maker of the OS? There are dozens of phones that were never given the official conversion to ICS that are slowly getting ports with other open ROMs.

RE: Window Phone 8
By NellyFromMA on 7/20/2012 10:42:08 AM , Rating: 2
Non-official is hardly a good comparison. We don't even have the opportunity to see what unofficially can happen with Win RT Win8 or WP8. It's the same.

Sayinvg it's the hardware manufacturer isn't the point. With Android, HW manufacturers create drivers and they decice which HW they make the drivers for.

It's not different.

RE: Window Phone 8
By jnemesh on 7/20/2012 2:28:20 PM , Rating: 2
A 2 year old phone running Android 2.2 can still run the vast majority of the apps available in the Play store. The WP7 bricks are incapable of running WP8 apps, that is the difference.

RE: Window Phone 8
By NellyFromMA on 7/26/2012 9:48:45 AM , Rating: 2
Bad comparison again. If an app specifically takes advantage of features only available in ICS or greater, they do not work. If they use resolutions higher than 2.2 max, good luck with that. Try again though, I enjoy the discussion. Compatability and its pros and cons didn't start with MS and they don't end there either. I'd think tech enthusiasts would be more open to that reality.

"And boy have we patented it!" -- Steve Jobs, Macworld 2007

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