Nokia running out of chances as cash reserves dwindle

Nokia running out of chances as cash reserves dwindleIt has been a monumental last 18 months for Nokia, it's safe to say, and no matter what happens from here onwards, it's safe to say that the good people of Finland are unlikely to forget the name Stephen Elop anytime soon.

But despite the upheaval, the promises, the burning platforms and everything else that's gone on under Elop's leadership, things are now coming to a head: either it turns it around now, or faces sinking for good.

In the end it's all about money. A company of Nokia's size typically has the kind of cash reserves to survive the lean times, a point Elop knew well when he committed the company to an entire year effectively in limbo between Symbian and Windows Phone.

But with a succession of worse-than-expected quarters having seen Nokia's cash reserves dwindle from €4.9bn to €2.8bn, and no sign that the end is in sight, many analysts are now concerned that Nokia will run out of money before it makes it out the other side.

In a poll of 30 analysts contacted by Reuters on Friday, consensus was that Nokia will blow through another €2bn over the next three quarters alone, leaving it perilously low on cash and still running in the negative.

Not all analysts agree that thing are quite that bad, but tellingly even the most optimistic said they expected Nokia's reserves to be completely exhausted next year.

Nokia says it's working aggressively to restructure and cut costs, but when you're bleeding money to the tune of billions, restructuring is only going to achieve so much.

The solution? Quite simply, Nokia needs to sell more phones. In other words, despite all the dramas and upheaval Nokia is exactly where it was 18 months ago. Only with a lot less money.

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10 comments

JanSt / MOD  May. 19, 2012 at 14:59

A couple of days ago, some Microsoft exec let it 'slip' that...wait.... WP has overtaken iOS in , ***cough*** China. "In just 2 months", too...
There was of course zero proof provided :D

And to preempt trolls - I have an N9 and 701 so shush....

matt101101 / MOD  May. 19, 2012 at 16:48

So, what's people's money on for Nokia; Android or bankruptcy?

An Android phone with the aesthetics of the Lumia 900 would sell well, I think. Especially with the Nokia brand (or what's left of it) printed on the front. Lets face it, WP is dead in the water, even with millions of dollars of marketing spent on it, and Android is the only thing Nokia haven't yet tried, so it's that or goodbye the the famous Finnish firm, IMHO.

JanSt / MOD  May. 19, 2012 at 16:55

Agree.
I'm not a big Android fan, but the Lumia 900 with ICS would be nice... add Nokia maps, Nokia music store etc....

matt101101 / MOD  May. 19, 2012 at 17:11

Yeah, an Exynos or Snapdragon S4 chip with 1GB of RAM would be needed too, as the hardware in expensive Android phones is years beyond that of the Lumia 900 (also, ICS would be an absolute pig on the current Lumia 900 hardware).

What's ICS like on the Nokia N9? That's as close to an Android Nokia as we've ever seen. I assume you've at least tried it out?

I know you're not a fan of Android, but the world seems to be at the moment. I'm just wondering if Nokia will embrace that love, or let Elop needlessly bankrupt the company, just to stay friends with M$...

JanSt / MOD  May. 19, 2012 at 17:27

Yeah, an Exynos or Snapdragon S4 chip with 1GB of RAM would be needed too, as the hardware in expensive Android phones is years beyond that of the Lumia 900 (also, ICS would be an absolute pig on the current Lumia 900 hardware).

What's ICS like on the Nokia N9? That's as close to an Android Nokia as we've ever seen. I assume you've at least tried it out?

I know you're not a fan of Android, but the world seems to be at the moment. I'm just wondering if Nokia will embrace that love, or let Elop needlessly bankrupt the company, just to stay friends with M$...


No, I haven't tried ICS on the N9, yet. I don't like using Windows, and I haven't seen a way to do it on Mac/Linux, yet.
Also, even the 2nd Alpha is nowhere near "finished". Why would I give up 'almost finished MeeGo' for half-working ICS? I'm not that bored :p I let the hardcore geeks do the work this time, and then when ICS works, I have probably broken the N9 hahaha

Betas  May. 19, 2012 at 17:42

Nokia + Android makes them another generic android oem. Only folk seeming to make cash out of android properly are sammy, who run android how nokia ran symbian - SE, LG and HTC fight for the rest.

Nokia are EXCELLENT are hardware design, just a pity their integration of services is poor and the fact the mass media has slaughtered their name means they have no chance unless ballmer and co. pump money into them.

ICS runs OK on the N9, abit shi** in that you cant make phone calls or texts so most people dont even bother with it atm.

For me though, I'll stick to Meego :P

JanSt / MOD  May. 19, 2012 at 18:34

Beta's - I thought the latest Nitroid release fixed phone calls?

Also, I partly agree re 'just another Android' maker. But imho Android could really use the quality of the N9's hardware. Heck, even the Nokia 701 I'm typing this on feels 'better' than every Android device I used - sturdy, well balanced, not obsessively anorexic. Good mix of plastic and metal.
And Nokia's email client, maps and music store (etc) would have added at least some differentiation to Android beyond 'just another UI skinjob'...

matt101101 / MOD  May. 19, 2012 at 23:03

Yeah, I agree with Jan here. Android's highest quality manufacturer is HTC, whose phones tend to be made of high quality materials, but the phones themselves still fall apart, long before they should. Nokia could change that, they could bring the build quality of the Lumia devices to the world of Android, it'd sure shake up the Android pecking order (though I get the feeling Samsung wouldn't be too bothered).

As for Nokia being just another Android manufacturer, surely that's better than being the manufacturer who insisted on only using two dead in the water operating systems and then went bust whilst blindly preaching about how one of them is a viable 3rd ecosystem, no? It all comes down that old phrase; if you can't beat them, join them. I think Nokia have proven they can't beat "them"...

satchef1  May. 20, 2012 at 00:18

I'm not so sure WP is dead in the water. Dead in the water would usually indicate a falling market share, WP7 (when separated from WM 6.5) is growing, roughly doubling market share in active territories in Q1.

I also strongly disagree with the news story. Nokia don't need to sell more phones; they're the second biggest phone manufacturer in the world. Their problems stem from their margins not being high enough. The handsets that they are selling don't make enough profit to cover costs. What they need is a market that they can make a decent margin on (which kinda makes me wonder why they chose WP, unless they managed to negotiate some sort of profit/cost sharing deal with Microsoft). I doubt Android would be the answer; Google wouldn't give them money to keep them going while they rebuilt their brand and if they actually started to threaten (the already well established in Android) Samsung they would find themselves in a price war that they cannot win. Maybe plan A (Meego) was a good idea. Then again, was the move to Tizen the direct result of Nokia's departure, or another example of the chaos of Moblin? Maybe Nokia saw the platform as being a mess. Who knows.

JanSt / MOD  May. 20, 2012 at 10:51

Satchef1,
To be totally honest...
Who knows. Maybe you're right.
The market and the 'geek scene' has changed so completely in the last 4 years.
When Sony Ericsson ditched UIQ to toy with winmo nobody but some hardcore SE gave a hoot. When they screwed UIQ users out of promised updates it didn't become
headline news.

Now, firmware updates are mainstream media 'news material'.
Everything has to happen now. Now. Now.

A new flagship gets released. And it's, " hey, what's the next one gonna be like"?!


When PC Mag's Sascha Segan called Android "already DOA" in 2009 he wasn't instantly ridiculed. It was more of a blip that would over time, as Android 'evolved' , acquire 'cult quote' status.
It's the iPhone's appeal to the mass media that turned debate about smartphones into this raging fanboy farce. The mass media need the dualism - real or made up, or a mix.
They know little about any issues, so they need a rivalry to talk about.
The Beatles get the Rolling Stones, Oasis get Blur... Etc etc...

And instead of music people start talking about style and attitude.
Same goes for anything that seeps into the MSM's hype accelerator...

Android wasn't an instant hit. But the media needed a plausible Apple nemesis, and Google was oh so cool. So, lets give them a break. But since the masses are dumb (in the media's mind) they cannot handle more than 2 parties...

Anyhoo... Expectations have gone nuts, I think. WP couldn't possibly achieve what Apple achieved - the situation was different. And in a mere 12 months they couldn't repeat Google's success. Heck, in my opinion Android still isn't mature. But that is another story.

Switching to Android NOW would definitely break Nokia. I believe it is too late for that.
Within WP at least they are fairly unrivalled. ( though pricing is an issue). If they joined Android NOW, Nokia would have Apple and Samsung and and and to fight... Plus disgruntled Symbian fans, MeeGo/Maemo fans, WP fans etc etc... Disaster.

Instead of trying to pretend to be a contender in a two party system, for now, they need to find a way to become a comfortable outsider.
Samsung said, I think, in 2006 or 2007 that they wanna become a top 3 vendor within 5 years. They achieved it. But they didn't need to persuade the Daily Telegraph, Twitter and every wannabe 'techexpert'....

Remember my post about the 101 reasons...? Here and on many other sites quite a few people on the WP site admitted after initial outcries of foulplay that some points are actually true, and funnier, that they only noticed AFTER reading the list.
That is a good example of how crazy times are. Some folks fighting over 'big issues' while many others don't even notice or care for that matter...

Interestingly to me - that is actually a symptom of one of the reasons why I hate Microsoft. Not so much the company, but what it stands for: a nanny OS. It is part of a complex that gave us the "computer age" where most folks don't know what OS they are using. Nevermind building one. It helped create a know-it-all culture of ignorance.
But I have a tiny bit of hope that the smartphone success makes a few more people realise there is a world outside the Windows. People using iOS and thus discovering Macs. People using webOS and Android learning about Java and Linux. Not many, but hey... Seeds get planted. Why can't a Windows laptop play divx out of the box (and soon no dvd), when some cheap phones can?
What can my tab and iPad do. What eles do I need? Actually not another laptop. Or maybe just one to serve my tab and phone? There's a shift: smartphones used to give us a bit of our computer for on-the-road. Now computers need to serve our phones and tabs... The next Lion will be more like iOS and Win 8 will be more like WP...

As to crystal-balling: Just look at Blackberry... first they were goners, then the popularity of BBM made BBs the unlikeliest teen-hit ever, and poof, suddenly gone again...

Of course, Nokia have their S40 feature phones to make up for some of the smartphone division's folly, but for how long?
I like the Asha series, but with the gap between entry-level Android and dumbphone closing rapidly, and Android gaining big-time in Nokia's former strongholds (such as India)???
And I lost track of where I started :D

Coffee now.

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