Nokia has been having a very, very hard time of it lately, dramatically losing market share in the smartphone race to the likes of Samsung and Apple, and getting slammed on a regular basis by the credit agencies. But you know what? Our troubled Finnish handset maker still has the ability to set investors’ pulses racing with even the slightest hint that something better may be just around the corner.
Such was the case this morning, when Stephen Elop made some very brief comments in which he affirmed the company’s commitment to Windows Phone (not news!), and didn’t outright deny that it would be launching its newest device in September (ummmm yeah). The result? Shares rising by some 6% and still trading up now.
What’s the meaning? Seems that, despite everything, even today’s S&P downgrade to BB-, people still want to believe in Nokia – and perhaps, Microsoft’s Windows Phone.
They want to believe so much that things can and will get better that they take even the smallest signs of confidence and strategy as indications of how Nokia is turning around.
Elop’s comments, made to reporters on the sidelines of a meeting in Oslo with the CEO of Telenor, reaffirmed, once again, his and Nokia’s commitment to Microsoft’s mobile platform. “I don’t think about rewinding the clock and thinking about competing elsewhere… In today’s war [between)] Android, Apple and Windows, we are very clear. We are fighting that with the Windows Phone,” he said.
He made no comment about when its next phones would be released, except to note that it would be in the ”relatively near term.”
This isn’t news we haven’t heard before. Elop pointed to as much during his last earnings call, when he hinted that Nokia could be the first to launch Windows Phone 8 handsets. Since then we’ve heard many murmurs that it would use the Nokia World trade show, on September 5-6, to show this off. That would make sense: Nokia World is where Nokia first showed off its first Lumia devices last year.
There’s been other kindling on the fire. The news also comes at the same time that we are seeing what appear to be leaks that support the idea of new launches. The latest (via WPCentral) shows a display frame with both the Nokia and Windows 8 logos, allegedly from one of Nokia’s sub-contractors. Without a hole for a camera, the blog concludes that it is part of a non-unibody, midrange device.
But there have been plenty of fire extinguishers, too.
As it has with past ratings agencies’ downgrades, Nokia dismissed the latest downgrade from S&P. “The impact of Standard & Poor’s decision on the company is limited,” said Timo Ihamuotila, Nokia’s EVP and CFO, in a statement. “As we continue our transition, we are applying a strong focus on cash conservation while simultaneously reducing our operating costs and making our operating model stronger and more agile.” The company currently has a net cash position of €4.2 billion ($5.2 billion), with a further, undrawn credit facility of €1.5 billion.
And there are the bare facts of what appears to be much lower consumer demand. In Q2, Nokia shipped 13 million smartphones, compared to 29 million from Apple and around 45 million from Samsung. Gartner yesterday noted that Symbian marketshare dropped to below 6% in the quarter compared to over 22% a year ago. Windows Phone, which is also used by other OEMs but for which Nokia accounts for the vast majority of sales, had a 2.7% share of sales last quarter.
Yet putting today’s signs rising shareprice against so many ongoing signals of decline highlights that Nokia has a major hill ahead of it but that it seems that there are still many who want to see it succeed. There is one other possible interpretation, too… could it be that the stock is going up because of vultures that are hoping the downgrade means it’s even more of a takeover target?
NOKIA is a Finnish multinational communications corporation. It is primarily engaged in the manufacturing of mobile devices and in converging Internet and communications industries. They make a wide range of mobile devices with services and software that enable people to experience music, navigation, video, television, imaging, games, business mobility and more. Nokia is the owner of Symbian operation system and partially owns MeeGo operating system.