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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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RE: Beat estimate by 1 million
By Reclaimer77 on 7/19/2012 3:57:57 PM , Rating: -1
That just means the estimates were off, not that Windows Phone has been particularly successful. Apple and Samsung wouldn't even get out of bed for 4 million units sold. Big deal!

Nokia obviously cannot compete in the hardware department, and even worst, people aren't going to wait for Windows 8 when they can get a better phone and OS from Team Droid. Google has thrown down the gauntlet to all comers with Android Jelly Bean.

RE: Beat estimate by 1 million
By Mitch101 on 7/19/2012 4:35:36 PM , Rating: 2
From Nokia alone there are 4 million more Windows Phones than last year:
1: Not every carrier was selling the Nokia.
2: This was just Nokia Sales.

AT&T has the worst shared data rates imaginable so I can see people waiting for Verizon.

For Windows Phone 8 you have Verizon planning a huge launch, Samsung is coming with a monster Windows 8 phone, Nokia is also coming with a monster Windows 8 phone, and companies I never heard of going to be making a Windows 8 Phones - Heck Acer is going to be making a Windows 8 phone.

Its not just the Phone carriers that want a third eco system its the phone manufactures that want Windows Phone to succeed.

While I think Jelly Bean is probably the best Android OS yet I really like the experience I get from Windows Phone 7 and am looking forward to the Windows Phone 8 devices.

Windows Phone 8 is going to get the hardware I don't feel I need but will probably enjoy having. Windows 8 phones will rival Android phone specs coming from Samsung and Nokia.

RE: Beat estimate by 1 million
By geddarkstorm on 7/19/2012 4:40:38 PM , Rating: 2
The 4 million is their global sales, of which 40% of those are windows phones, not all of them. The rest are Symbian.

Now realize, HTC just sold 13.4 million phones globally this last quarter.

Puts Nokia in perspective.

RE: Beat estimate by 1 million
By geddarkstorm on 7/19/2012 4:42:31 PM , Rating: 2
Oh oops, sorry, yes the 4 million windows phones globally was Nokia; the total was 10 million phones, 40% of that being windows phones.

RE: Beat estimate by 1 million
By Mitch101 on 7/19/2012 4:55:35 PM , Rating: 2
Windows Phones units increased 50% between Q1 and Q2 2012.

Direct to the Slide

RE: Beat estimate by 1 million
By Tony Swash on 7/20/12, Rating: -1
RE: Beat estimate by 1 million
By MrBlastman on 7/20/2012 10:56:23 AM , Rating: 3
For once, I agree with you Tony.

You're right!

Coming back from total failure is hard. Apple has totally failed to win me over as a customer and I don't see that changing anytime in the future!

Thanks for the insight. :)

RE: Beat estimate by 1 million
By geddarkstorm on 7/19/2012 4:50:47 PM , Rating: 2
Actually, that was old HTC data, and they are selling more than that now. You know what, sales data is just a pain to look through.

RE: Beat estimate by 1 million
By NellyFromMA on 7/19/2012 4:51:52 PM , Rating: 3
Um, the Lumia 900 is praised by all for being a great peice of hardware overall. So, how do they not compete? Let's try again in Q3 Q4 2012 or Q1 2013. Big things are happening then, can't you tell?

RE: Beat estimate by 1 million
By Reclaimer77 on 7/19/12, Rating: 0
RE: Beat estimate by 1 million
By Mitch101 on 7/19/12, Rating: 0
RE: Beat estimate by 1 million
By Reclaimer77 on 7/19/2012 5:37:57 PM , Rating: 2
LOL awww I'm sorry, did I interrupt your WP circle jerk?

So a few defects and issues with the first run of the Galaxy S3 that will be corrected... okay, what exactly are you trying to say? How does this make WP more viable anyway? The Galaxy S3 is just one phone. There's like 15 Android phones that outsell the Lumia 900.


You're bashing the Galaxy S3, while the Lumia has defects so significant Nokia had to give people $100 credits for their trouble. Hello?

What will you talk about when Windows Phone 8 runs on the same hardware and comes from the same manufacturer like Samsung?

I'll say about time. But Android is still better :) If JellyBean is a taste of the future, you can forget WP picking up a ton of steam.

RE: Beat estimate by 1 million
By chripuck on 7/19/2012 5:48:19 PM , Rating: 4
Wow, douche bag alert. Speaking of circle jerk, did you finish your Android circle jerk yet?

Seriously, I owned the Galaxy S II and it was a piece of junk. I went back to an iPhone because of it. It felt cheap, the wifi gave me nothing but problems and that "gorgeous" super amoled display had too much blue shift for my taste.

The Nokia is the first phone on the market that actually has the build quality of Apple. If they'd up the ante in the camera/video department I'd be tempted to try it. As it stands, Samsung's cheap plastic "powerhouses" aren't cutting it for folks who want something that feels as premium in their hand as it was when they gave away their money.

RE: Beat estimate by 1 million
By Reclaimer77 on 7/19/12, Rating: -1
RE: Beat estimate by 1 million
By KIJ20 on 7/19/2012 8:34:57 PM , Rating: 3
Statistics of phone returns in our company due to problems with the phones:
Lumia: 0%
iPhone: 5 %
Galaxy SII: 80 %

Very unstatistical way of measuring - but almost all the Galaxy SII's has been returned due to errors like randoms crashes, screen problems and so on. Wouldn't expect soo many problems for a phone like that, as I guess they use the same suppliers as Apple and Nokia (Samsung is a big supplier). And finally, of these 3 phones, Lumia is the only one left we can still choose as company phone.

RE: Beat estimate by 1 million
By Reclaimer77 on 7/20/12, Rating: -1
RE: Beat estimate by 1 million
By tamalero on 7/20/2012 10:42:37 AM , Rating: 2
Citation needed.

RE: Beat estimate by 1 million
By Mitch101 on 7/19/2012 7:25:52 PM , Rating: 1
Hes just jealous because he cant find his d1ck so he tries to compensate with big hardware.

RE: Beat estimate by 1 million
By Reclaimer77 on 7/20/12, Rating: 0
RE: Beat estimate by 1 million
By Mitch101 on 7/20/2012 11:31:07 AM , Rating: 1
You cast the first stone "WP circle jerk"

You remind me of Walter Peck

RE: Beat estimate by 1 million
By Reclaimer77 on 7/20/2012 11:51:45 AM , Rating: 2
Yeah that was totally the same as saying you had no penis or whatever lol.

Hey I'm not whining, bring it on if that's how you want to play it. I just thought it wasn't even a very good insult, pretty immature, and was thrown way too early.

If you're going to cheer-lead and post sales projections and profit numbers like the WP version of Tony Swash, you can't get offended when someone brings you back down to Earth.

RE: Beat estimate by 1 million
By Mitch101 on 7/20/2012 1:40:43 PM , Rating: 2
Some will get the analogy you like to compare the latest product release with the biggest hardware to everything else is somehow crap despite people really enjoying the device.

Im really happy with my windows phone and Im not going to let someone with their e-penis tell me somehow how my life is incomplete or ruined because of the choice I made. If I didn't like it I would say it sucks but its darn good but I and all those people on Amazon, Verizon, AT&T, Sprint who gave the phone great reviews must be stupid.

In your eyes the lumina must be garbage because it doesn't have 4 cores and run Android despite being a perfectly good device with a very high satisfaction rate but were all wrong and your right. Ive had enough Android devices to make a decision on why I prefer the Windows Phone over the Android.

God forbid anyone like something other than Android mobile and your all over them as if we've all made a huge mistake.

I dont care if Im the Tony Swash of Windows Phone Im happy with my device. Your happy with Android but unlike you I dont feel the need to make negative comments on every non Android post out there.

Keep on trolling Reclaimer.

RE: Beat estimate by 1 million
By Reclaimer77 on 7/20/2012 2:46:39 PM , Rating: 2
Man I think you packed more melodrama into that post than the entire Twilight franchise. Please, chill out. You're going WAY overboard.

The Lumia 900 is NOT garbage. What's happened here is that Jason and a few others were so desperate for Windows Phone to work out, you heralded the Lumia with WP 7.5 as the "next big thing" in mobile computing, when it's clearly not.

It's an average phone running an OS that's FAR behind the times. Those are the facts. If you like it, great. Where am I tell you that you cannot like it?

You can find posts of mine from last year, maybe 2 years ago, praising Microsoft and predicting a MS vs Apple war for the top spot. Your opinion of me as an MS basher is SO far off the mark. However it's now become clear to me that under Balmer, Microsoft is a stumbling giant. They seem incapable of delivering on their promises, and WP has stagnated.

RE: Beat estimate by 1 million
By Flunk on 8/10/2012 9:02:18 AM , Rating: 2
I don't think that would matter, as the Android version of Tony Swash I don't think anything would affect your opinion.

RE: Beat estimate by 1 million
By jnemesh on 7/20/2012 11:01:17 AM , Rating: 1
Hey! My Palm was WAY more functional than the WP piles of junk!

RE: Beat estimate by 1 million
By nafhan on 7/19/2012 5:57:20 PM , Rating: 3
When the iPhone came out there wasn't really a "great" phone to compete with. When Android devices started rolling out, they were competing with ONE great phone one one carrier. The Lumia 900, despite being great, has the major disadvantage of competing in a market crowded with excellent hardware and software choices.

Also, between the release of the Lumia 900 and Q1 next year, a number of excellent Android handsets and the next iPhone are all coming to market. Beginning of this year was the Lumia's time to shine.

RE: Beat estimate by 1 million
By Voldenuit on 7/20/2012 1:42:01 AM , Rating: 2
They are crippled by windows phone's hardware and software limitations.

* Outdated single core CPU and slow GPU.
* No mountable file system = no removable SD card
* No bluetooth file transfer (wtf?)
* No USB host/ USB2Go
* No MTP transfer mode = klunky Zune client ball and chain dependence
* Lousy developer access and tools for low level APIs
* Poor multitasking support
* Poor offline Maps support
* Worse camera than N8/808

WP7 is inferior in every metric to Symbian/Belle phones, and I don't know if WP8 is going to fix this. MS has a vested interest in promoting Skydrive, so I can see them continue to limit WP8's connectivity/data/file transfer options, which will hurt consumers' choices and options.

I sincerely hope they step down from their hubris and make a phone system that's more open and accommodating than WP7. I'm sure nokia is praying for the same thing. Otherwise, it's time for the oft-rumored 'Plan B'.

RE: Beat estimate by 1 million
By Chaser on 7/20/2012 1:49:49 PM , Rating: 2
I wish I had known all this before I had bought my Lumia 900. As an android user I "expected" all this on a state of the big art Microsoft developed Windows 7 phone.

What a joke. I am glad AT&T took it back and gave me a refund.

RE: Beat estimate by 1 million
By Calin on 7/20/2012 3:45:21 AM , Rating: 2
A Lumia 800 is only 10% cheaper (without contract) than a Galaxy Nexus at Vodafone Romania (449 versus 479 euro). With a smartphone contract, the Nexus is half the price (69 vs. 149 Euro, final sale price VAT included). Also, without contract one could buy an LG Sol for a bit more than half the price of the Lumia 800.
As I've visited the Vodaphone shops several times this year, the Nokia phones aren't positioned to sell.

RE: Beat estimate by 1 million
By cheese098 on 7/24/2012 7:47:50 AM , Rating: 1
Holy crap what Kind of prices are these? O_o I can get a lumia 800 for 300 euro without contract in switzerland! with a modest contract it'd be around 50-100 euro i guess. As for that I think vodafone are just assholes not willing to sell the lumia ;)

RE: Beat estimate by 1 million
By nikon133 on 7/19/2012 5:07:47 PM , Rating: 2
That is not really fair - Nokia WP phones were limited by Windows Phone 7.5 itself. Nokia couldn't make anything above single core, 800x480 device with no SD card etc. etc.

With WP8 removing most of hardware limitations, we'll see what can Nokia do in hardware department. I believe they can compete with likes of Samsung performance and feature wise, while still having better design.

"A politician stumbles over himself... Then they pick it out. They edit it. He runs the clip, and then he makes a funny face, and the whole audience has a Pavlovian response." -- Joe Scarborough on John Stewart over Jim Cramer

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