Further mess for Nokia cellphone maker
Nokia’s chief executive, Stephen Elop, commissioned a message around to staff earlier in the week warning them that they was “standing on a burning platform”. But no more, as Mobile maker has since broadcast that it would now use Windows software and the Microsoft
Bing search engine on its mobile handset.
Nokia and Microsoft
have made an agreement that would lead to the Windows phone operating system running on Nokia smartphones. The business seems icontract. Microsoft
Window’s cell phones are well regarded by industry experts, but they have just 2% of the market. Meanwhile, Nokia’s own software platform - Symbian, is broadly judged to be a flash in the pan. And all the while, Google
and Apple soar ahead. The deal means that Nokia’s existing operating systems will be sidelined.
The broadcast comes only days after announcement reports revealed an internal Nokia message issued by Chief Executive Stephen Elop who analogized the company’s position in the smartphone market that the company has continued to pour more fuel in the fire.
The agreement was not greeted with confidence as speaking at the launch of the alliance, Nokia’s CEO Stephen Elop revealed that there would be “substantial” job losses as a result of the tie-up.
Analysts were negative about the partnership. Channel 4 quoted: “This is a partnership born out of both parties’ fear of marginalisation at the hands of Apple and Google, but there is no silver bullet.” The implicit admission that Nokia’s platform plan has failed and that Microsoft’s Bing search engine does not stand up to Google is “very frank” - perhaps a bit too frank. Meanwhile a few analysts revealed the Financial Times that “One’s worst enemy when fighting against a fire is time. This partnership will take time to put into action . This is what could kill Nokia.”
The company has lost market share at the high end to the likes of Apple Inc and HTC over the previous two years. Increasingly, analysts concern that it could start losing ground in emerging markets, its bread and butter for years, in 2011. Nokia replaced its Chief executive a few months ago but Elop has yet to reveal reversal plans. Nokias software strategy is of particular interest as its determination to stick with Symbian as its smart phone operating system of choice is believed by many to be at the root of its inability to come up with convincing high end handsets.
Despite the revelations of sweeping changes, the vendor is cautious on the short term impact of the changes noting that 2011 and 2012 would be “transition years,” focused on building a Windows ecosystem. Over the last 52 weeks the stock has ranged from a low of $8.00 to a high of $15.88. Nokia shares dropped over 14% today and mass layoffs at the struggling Finnish firm are predicted. Analysts predicting that the Nokia’s market share in global handset sales will fall in 2011.
In the longer term, the vendor revealed plans to grow devices and services sales “faster than the market,” and boost operating margins to 10% or higher.
If you are trading for a hedged play on Nokia. The stock seems like can be a candidate for a July out of the money bear call credit spread above the 12 range.
Article Source: i2 Article Directory (www.i2articledirectory.info)