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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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slow and steady wins the race?
By Roffles on 7/19/2012 4:01:27 PM , Rating: 3
I have no desire to own a wp7 device. The overall functionality is lacking and the hardware doesn't impress me. Also, the current crop of devices won't receive wp8 updates.

But something big is can tell by Microsoft's progress and the most recent announcements. They are putting something cohesive together. Just imagine owning a Windows 8 x86 surface tablet to do your work with, an xbox 720 for media/games/entertainment, and a wp8 for pocket mobility. Imagine having them all working together in sync. It would be pretty awesome. I hope Nokia hangs on for just a while longer...I'm a potential customer because I can see a bright future here.

RE: slow and steady wins the race?
By name99 on 7/19/2012 5:38:27 PM , Rating: 1
"Imagine having them all working together in sync. It would be pretty awesome."

Why do we have to imagine it? If you have a Mac and iOS devices, you have this TODAY. In a slightly different form, if you use Chrome and Android devices you also have a version of it today.

RE: slow and steady wins the race?
By Roffles on 7/19/2012 8:14:45 PM , Rating: 3
Apple doesn't have a premier gaming machine and I doubt they ever will. And if they did, I doubt anyone would care with the ps4 and xbox720 on the horizon -- there's no room and no need for another player.

Their tablet is only a tablet where the upcoming Surface will be a tablet and a full-on Ivy Bridge PC (it's amazing it took so long for someone to figure out that you can easily combine the tablet form and the notebook form together with a removable keyboard and a touch screen). This is the perfect example of reducing electronic clutter, having your cake, and eating it too.

Apple's phone out of the box is locked down with limited functionality (functionality: in the geek sense of the word compared to Android out of the box) The 3.5" screen does nothing for me but limit the overall usefulness of the phone as well.

Apple TV won't play my library of 1080p MKV bluray rips....amongst other features it lacks compared to my boxee. And finally, no, I won't let iTunes manage all my music and media. No thank you.

Seriously, Apple makes overpriced designer boutique consumer fodder products for people who are willing to spend money on every little thing and accept the limited functionality as the way things are because they generally don't know much about competitive products....not my idea of geeking out. And I don't like their litigious way of abusing a broken patent system. So, to summarize in this haphazardly written few paragraphs, Apple is about as cohesive as the stack of hundred dollar bills in your wallet that are waiting to buy into the consumer illusion.

RE: slow and steady wins the race?
By Roffles on 7/19/2012 8:17:41 PM , Rating: 2
...oh and x2 for everything I just said about tablets and media streamers for the Android system as well. Android makes the most useful phones though.

RE: slow and steady wins the race?
By ctodd on 7/20/2012 3:13:41 PM , Rating: 2
I laughed and cried when MS debuted WP8 and the big NEWS was that you could fit more tiles on the screen. Like I really care about more tiles on a screen! So many things that needed to be changed or added and they focused on petty crap like tiles. I've seen the cohesion so far and I'm not impressed. I'll buy a surface when it is release just because I want a windows tablet, but they are not getting another dime out of me for a phone!!

"This week I got an iPhone. This weekend I got four chargers so I can keep it charged everywhere I go and a land line so I can actually make phone calls." -- Facebook CEO Mark Zuckerberg

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