Arab Today, arab today nokia clings onto cash despite big loss
Last Updated : GMT 04:39:56
Arab Today, arab today
Arab Today, arab today

Nokia clings onto cash despite big loss

Arab Today, arab today

Arab Today, arab today Nokia clings onto cash despite big loss

Helsinki - Arabstoday

Ailing mobile maker Nokia turned in another thumping loss yesterday, as it tries to arrest a decline toward irrelevance in a smartphone market dominated by Apple’s iPhone and Samsung’s Galaxy models. The company, which has been burning through money at a rate that would clean it out in a couple of years, managed, however, to cling on to more of its cash reserves than the market had feared, giving its battered shares an 18 percent boost. The shares had fallen around 80 percent since February 2011 when new Chief Executive Stephen Elop announced a shift to the largely untried Microsoft Windows phone operating system. Quarterly sales of its new Lumia phones, which run the Microsoft software, doubled from a low base in the previous quarter, but have yet to grab share back from Apple and Samsung Electronics in the most profitable part of the mobile market. Some analysts were already speculating that Elop’s days were numbered if the corner has not been turned by year-end. Nokia reported a second-quarter net loss of 1.53 billion euros, or 8 euro cents a share when adjusted for one-off items, compared with the market’s average forecast for a loss of 9 euro cents a share. “Clearly, our financial performance is not acceptable,” Nokia’s CFO Timo Ihamuotila conceded. The company is trying to improve its finances by cutting 10,000 jobs globally and focusing spending in areas like research and development that it hopes will generate a payback. At the quarter end it held net cash of 4.2 billion euros ($ 5.2 billion), compared with the market estimate of 3.7 billion, but still down from 4.9 billion at the end of the first quarter. The cash position was helped by the contribution from Nokia Siemens Networks, its telecoms gear joint venture with Siemens, which reported better-than-expected profit and forecast improvement in the third quarter, in contrast with struggling rivals like Alcatel-Lucent. Details showed that advance royalty payments of 400 million euros had put a gloss on its cash position, but Nokia shares were nevertheless up 16.7 percent at 1.60 euros at 1311 GMT, having been as high as 1.622 euros. Nokia forecast its third-quarter loss in the phone business would be just as steep as the second at minus 9.1 percent, an outlook that was worse than analysts had expected. “I don’t think there’s anything fundamentally fixed,” said Lee Simpson, analyst at Jefferies & Co. In the third quarter, Nokia will struggle to sell its Lumia phones, which are already exuding a whiff of obsolescence after Microsoft announced a software upgrade that will not apply to existing Windows Phones. Juha Varis, who holds Nokia shares as part of the Danske Invest Finnish Equity Fund, said he was worried Nokia had placed all its bets on Windows Phone, which wasn’t yet showing it could help reverse Nokia’s fortunes. Nokia sold 4 million Windows phones in the second quarter, still only a fraction of Apple’s expected sales of 30 million iPhones or Samsung’s 50 million smartphones. “I think currently the company is too dependent on Microsoft. What happens if this marriage ends?” Varis said, adding that Elop was likely to come under pressure to quit if there’s no breakthrough in Windows Phones numbers by the end of the year. “If Windows Phones stay at current levels, I think they have to do a Plan B. They would need to do something drastic, and I think the view is that Elop isn’t that guy,” he said. In the three months to June, all three major credit ratings agencies have cut Nokia bonds to “junk,” while the company warned twice on profits and said it planned to cut one in five jobs. From arabnews

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