Nokia Could be Out of Cash in Just a Year

Nokia logoEven as Finnish phonemaker Nokia is having its first taste of sales success in the U.S. with the new Windows Phone 7.5 Lumia 900 on AT&T network, the company finds itself running out of rope financially.

I. Dwindling Cash

Nokia has €4.9B ($6.23B USD) in direct cash reserves. But in the last five quarters, it bled out €2.1B ($2.67B USD). A Reuters poll of analysts indicates that on average the expectation is for these losses to accelerate to €2B USD ($2.54B USD) in the next three quarters, while a few extremely bearish analysts believe Nokia could lose its full €4.9B stockpile in one year.

Running out of cash -- particularly when two of the top three credit agencies have rated its credit at "junk" status -- could be a death sentence, necessitating a sale or merger.

And to make matters worse, Nokia has a €1.25B ($1.59B USD) bond obligation maturing in two years (2014). Many believe that there's substantial risk of a default.

Company spokesman James Etheridge insists that Nokia is on the verge of a turnaround, stating, "Nokia is implementing a decisive action plan to position our company for future growth and success. The main focus of these actions is on lowering the company's costs, improving cash flow and maintaining a strong financial position."

II. Company Took 1 Yr. & 2 Mo. to Launch Its Flagship Windows Phone

Some fear Nokia's promising Lumia lineup of Windows Phones may be too little, too late. Indeed, after announcing a parternship with Microsoft in February 2011, it took the firm nine months -- until November -- to begin to release product. Nokia didn't bring a product to the U.S. until January -- eleven months -- and did not bring a flagship model (the Lumia 800 or 900) to the U.S. until April's launch of the Lumia 900 on AT&T.

In other words, Nokia took a year and two months to release a competitive handset in the U.S. and despite its excessively relaxed schedule still managed to suffer some of the same kind of hiccups typically associated with companies with tighter release cycles (such as Apple).

Given the stark details of Nokia's baffling sluggishness, it's unsurprising that the company now finds itself hanging over a financial precipice on a fraying lifeline of cash. With more promising handsets, analysts expect Nokia's smartphone sales to rise from 20 million units this year to 46 million next year.

That increase leads some to believe that Nokia has a shot at recovery -- even if it is far from a sure shot. States one anonymous banker to Reuters, "There are chances for Nokia to shape up and recover, but it's going to be tough. The TMT market is fast moving, and even one slip-up can cost a company its whole future."

While some analysts predict Nokia to run out of money, some of those doubters still believe that ally Microsoft will act as a "white knight" investor, buying either a stake -- or even all of -- Nokia to save its partner from bankruptcy. At this point, though, only two things are sure -- pessimism is at an all time high regarding Nokia, and the smartphone maker is running out of fiscal rope.

Source: DailyTech

Tags: Nokia

Comments
Add comment

Your name:
Sign in with:
or
Your comment:


Enter code:

E-mail (not required)
E-mail will not be disclosed to the third party


Last news

 
Sales of new models way below those of 2017 generation
 
The new Windows 10 browser will run on the Chromium engine
 
Google will shut the service down in April of 2019 instead of August as initially planned
 
The regular S10 will sport a 6.1-inch panel with the same front-facing camera design
 
The smartphone has a 6.4-inch Full HD+ (2340 x 1080 pixel) Infinity-O display
 
Google Play Services will deprecate the aging OS in newer releases
 
Apple might be looking to trial the feature on the iPad before iPhone
 
Toshiba, which released the world’s first 14TB nearline 3.5-inch and 26.1mm-height HDDs with 9-disk
The Samsung Galaxy A5 (2017) Review
The evolution of the successful smartphone, now with a waterproof body and USB Type-C
February 7, 2017 /
Samsung Galaxy TabPro S - a tablet with the Windows-keyboard
The first Windows-tablet with the 12-inch display Super AMOLED
June 7, 2016 /
Keyboards for iOS
Ten iOS keyboards review
July 18, 2015 /
Samsung E1200 Mobile Phone Review
A cheap phone with a good screen
March 8, 2015 / 4
Creative Sound Blaster Z sound card review
Good sound for those who are not satisfied with the onboard solution
September 25, 2014 / 2
Samsung Galaxy Gear: Smartwatch at High Price
The first smartwatch from Samsung - almost a smartphone with a small body
December 19, 2013 /
 
 

News Archive

 
 
SuMoTuWeThFrSa
      1
2345678
9101112131415
16171819202122
23242526272829
3031     




Poll

Do you use microSD card with your phone?
or leave your own version in comments (11)