Tough Times Ahead for Nokia

Any hopes of Nokia bouncing back to glory in the near future have once again been dampened, as the ailing Finnish brand is expected to report worse than expected losses for the quarter next week. What’s more, analysts and market experts alike remain less than convinced that sales of its Windows Phone devices will pick up significantly before Q4 at the earliest, painting a picture of a truly disappointing year.

While Nokia remains at present the second biggest producer of mobile phones in the world, their late entry to the Smartphone battlefield has been one they have never quite managed to succeed in. While Samsung and Apple have taken no prisoners and risen to greatness year after year, Nokia’s Lumia Smartphones have somehow failed to strike a chord with consumers each and every time.

Tough Times Ahead for Nokia

Recipe for Failure

Reviewers have praised and saluted both the Lumia range and its Windows Phone OS, but the overall package has been one unable to steal any of the spotlight from Google’s Android or Apple’s iOS.

During Q2 alone, Nokia bonds were relegated to ‘Junk’ status by the three major credit agencies, while the company issued a warning that at least 20% of all jobs are to go over the coming months.

This was compounded by the unveiling of Windows Phone 8 by Microsoft – the OS that could potentially have rocketed the Lumia range back to glory, though sadly is not compatible with any current Windows Phone devices. As such, the existing Lumia rage has effectively been given an untimely death sentence and is unlikely to garner anything other than minimal sales as the Windows Phone 8 launch date draws closer.

Borrowed Time?

Nokia is in trouble – the only question that remains is exactly how much said troubles will grow.

Analyst estimates suggest that Nokia is about to announce quarterly losses of €236 million, which isn’t far from double the losses reported in Q1. Should Nokia go ahead with the expected rollout of lower-end handsets for the developing markets of the world, these losses are expected to reduce to €149 million for Q3.

Share values in the Finnish group dropped below the €1.50 over the course of this week – the first time in over 15 years and a depressing 60% dip from May this year.

Perhaps most worrying of all is the suggestion by several analysts that Nokia is currently annihilating its cash reserves at a rate they simply cannot keep up. So severe is the cash-flow issue that according to those behind the projections, Nokia is at serious risk of bankruptcy by 2014 should the tide not be stemmed. It is of course such heavy losses that have led to so many jobs on the chopping block at Nokia – no less than 10,000 in efforts to save a small fortune.

Holiday Respite

On the other hand, Nokia is expected to enjoy a successful Q4 with a flurry of new Windows Phone 8 devices on the shelves in plenty of time for the holiday buying frenzy. It may simply be a question therefore of keeping things ticking over until then, though with the Samsung Galaxy S3 and perhaps even the iPhone 5 to contend with in the meantime, the next few months are set to be no walk in the park for Nokia.

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