Below news reminds me of the days when Pagers ("bleeb" as it was called locally in UAE) were a craze and then motorolla leading the market and then some two decades ago alcatel leading the market then nokia took the lead.
So after nokia is buried which one is next to be buried after two decades?
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June 18, 2012
Its sink or swim for Nokia after massive cost cuts
Nokias surprise announcement of massive new spending cuts and 10,000 more layoffs had observers cautioning the beleaguered mobile phone giant is at a crossroads that will determine if it sinks or swims.
Nokia, which only recently lost the world number one ranking it had held for 14 years, dramatically changed its strategy a year-and-a-half ago when the then new chief executive, Stephen Elop, warned it was standing on a burning platform and needed to immediately shift course.
But after the company on Thursday suddenly said new big spending cuts and another 10,000 job cuts would be needed on top of the some 12,000 layoffs already announced since the shift, some observers said the company appeared to be slowly committing suicide.
Nokia jumped from a burning oil platform and sank like a stone, the STT news agency said, summing up Thursdays announcement.
The Finnish companys new strategy involved phasing out its Symbian smartphones in favour of a partnership with Microsoft.
That alliance has produced a first line of Lumia smartphones, which Nokia is counting on to help it survive in a rapidly changing landscape marked by stiff competition from RiMs Blackberry, Apples iPhone and handsets running Googles Android platform.
I believe it was the wrong strategy from the beginning, Andalys Oy analyst Ari Hakkarainen told AFP, stressing though that now that Nokia had shifted course it was too late to turn the tanker around.
They have chosen this strategy and they have invested everything that Nokia has in the new strategy. Basically, they must succeed or die, he said.
They are at a crossroads, agreed Pohjola Bank analyst Hannu Rauhala, adding that it was hard to predict Nokias future since the visibility of the business is very poor.
The company, which in 2008 enjoyed more than 40 per cent of the global mobile phone market, was already struggling to maintain its leading position when it entered the Microsoft partnership.
Since that deal it has been bumped by Samsung as king on the hill and reportedly has just around 20 per cent market share.
Nokia took a calculated risk and they knew that [the shift] would be very painful and that Nokia would lose market share in the short term, but in the long term of course, they have the reasoning that Nokia will bounce back, Hakkarainen said.
The companys announcement on Thursday that it would implement an additional 1.6 billion (Dh7.42 billion) in cost cuts by the end of 2013, shutting down factories in Germany, Canada and Finland and letting go 10,000 more employees was meanwhile taken as a bad sign by many.
Perhaps they should have enacted these reforms earlier. Investors who are looking for long-term profit are not convinced that Nokia is a company that can deliver in the future, Dividend House analyst Arje Rimon told AFP.
Nokias stock price plunged by as much as 16 per cent on Thursday and on Friday, ratings agency Moodys downgraded the companys long-term credit rating to junk status, following in the footsteps of Fitch and Standard and Poors.
Todays rating action reflects our view that Nokias far-reaching restructuring plan... delineates a scale of earnings pressure and cash consumption that is larger than we had previously assumed, Moodys said, adding though that it thought the restructuring was positive and necessary.
Analysts too were caught off guard by the scope of Thursdays announcement.
I thought it would be smaller... This shows the market situation is worse than we thought, Rauhala said.
Many observers meanwhile applauded Nokia for its decision to slim down in a bid to improve its competitiveness.
Juhani Risku, previously in charge of Nokia innovation, told AFP he thought it was an excellent move to make the company smaller.
Hopefully, it will make the company more competitive, as it will have to sell fewer phones to cover its fixed costs, agreed Nomura Securities analyst Richard Windsor.
At the end of March, Nokia counted 122,148 employees worldwide, including the nearly 70,000 working for Nokia Siemens Network, but those numbers do not take into account the tens of thousands of layoffs announced but not yet put into effect.
As Nokia continues to trim down and in light of its share price which since Elop announced the strategy shift has fallen from above 8 to below 2 has meanwhile made the company a prime takeover target, observers say.
Thats certainly possible, Rauhala said, mentioning Samsung, Microsoft and Facebook as names circulating as potential buyers.
Nokia has many interesting assets [and] its brand is still very good, he said.
According to Andalys Oy analyst Hakkarainen, however, the companys brand might be so strong that it would frighten off its direct competitors, which might not want to pay the price for another brand or want the hassle with regulators.
But if I was an Asian, or lets say a Chinese manufacturer, I would be very interested, he told AFP.
gulfnews : It
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June 18, 2012
Time running out for Nokia to pull back
Nokias cashflow will be negative at ₤1.2 billion
Nokia this week said it would axe 10,000 staff and reshuffle jobs at the top. Losses at its mobile phone business this quarter, it admitted, would be even larger than expected.
The announcement follows months of an increasingly desperate scramble to reverse the decline at the company, until recently the world's biggest seller of mobile phones.
Since Stephen Elop took over as chief executive in 2010 he has cut 24,000 jobs, including those announced on Thursday, from a total of 66,000. Most controversially, he has pinned the company's future to an alliance with Microsoft to produce a Windows phone.
So far his efforts have yielded little. Nokia shares have shed three-quarters of their value since Mr Elop took over. And Nokias losses are mounting as it becomes ever clearer that it is losing the mobile phone war to Apple and phones using the Android operating system.
There is no question that Nokias management realises the depths of the crisis it is in. But Mr Elops valiant attempts to reduce costs are not sufficient. What is needed is a significant boost at the other end of the equation - to sales and the topline.
For this to happen, Nokias strategy - based on its new Lumia phones, and the launch of an operating system within the next year - must start to pay off. Unfortunately, with little sign of this happening, Nokia may be running out of time.
Its mobile phone division is burning through cash, and although the company's overall position is still comfortable - it had nearly ₤5 billion in net cash at the last count - it has a ₤1.25 billion bond falling due in early 2014.
More importantly, Deutsche Bank estimates that Nokia's cash flow, after operational losses and capital spending, will be negative to the tune of ₤1.2bn this year, enough to put another big dent in its cash pile and, surely, to prompt investors to demand yet more radical action.
This could take a number of forms. Mr Elop could do a U-turn on his U-turn and opt for the Android operating system instead of building one from scratch. This seems unlikely given how much he has riding on the Microsoft deal and, in any case, might not suffice to turn round Nokia's fortunes.
Nokia could, instead, be taken over, or broken up. Microsoft could convert its partnership into a fuller embrace. Samsung, keen to get its hands on Nokias valuable patents, is also a contender.
Although many of the patents are tied into cross-licensing agreements with other industry players, estimates of their standalone value suggest they could be a prize worth fighting for.
In the early 1990s, Jorma Ollila pulled Nokia back from the brink by focusing on the company's small mobile handset division. By 1996, it was the biggest handset maker in the world. Twelve years later, not only has Nokia lost that crown but investors should be questioning whether another resurrection is possible.
gulfnews : Time running out for Nokia to pull back