Feeds

After Black Friday, Nokia acts to halt share slide

Lock down the exits, quick

High performance access to file storage

Why did investors who rallied to Nokia two weeks ago, when new CEO Stephen Elop hinted at a Microsoft deal, desert the company on Friday?

The market wiped $17bn off Nokia's share price on Black Friday, once the strategy was disclosed, with the stock losing almost 14 per cent in value in a day. The fall continues: three per cent down this morning in pre-market trading.

Last night Nokia acted to soothe investors. Statements by Elop and the new head of smart devices at Nokia, Jo Harlow, at Mobile World Congress 2011 in Barcelona all point to assuring the markets that the transition period will be less bumpy, and also hint the Microsoft deal is sweetened by pots of cash. Yet the reports circulating today wildly overstate the case.

Some reports suggest that Harlow said the first Nokia Windows Phone will appear in 2011. In fact, she made no such commitment. Pressed when the first WP7 devices would appear she merely noted that, "I can't tell you when, but my boss has told me he would be much happier if that time was in 2011." And that was all.

A wire report claiming that "Microsoft is paying Nokia billions of dollars to switch to Windows Phone 7" is equally ill-founded.

What Elop actually said was that the "net benefit" of the strategy changes he announced would ultimately save Nokia billions. "The value transferred to Nokia is measured in billions not millions," he said.

That's not the same thing. Ending Symbian and Meego development, and using Microsoft as an outsourced supplier, ought to save substantial R&D costs. Perhaps this will add up to billions of dollars, eventually. But this doesn't mean Microsoft is providing nine-figure marketing and engineering support - as the headline on the original wire report suggests.

Let's return to the original question - why do investors think Elop's strategy is a dud today, when they were so enticed by the prospect of a fresh start just two weeks ago? Analysts called for Nokia to offer competitive smartphones once again, and cut its costs, and so rallied to heavy hints Elop dropped of using an outside platform. Hasn't he ushered in the changes they craved?

Reality sinks in

One factor is that Elop has gambled on an all-or-nothing strategy, kicking the ground from under Symbian (which is being grandfathered) and Meego (which becomes a small labs project). This increases the short-term and medium-term risks - risks which are now being factored into the share price.

Some investors are also waking up to the reality that Windows Phone 7 is much less advanced than many suppose. It is not a carrier-grade OS and lacks many of the tick-box features operators and users demand. In many ways it resembles Symbian circa 2001. It's a long way from being "finished" (let alone "Finnish-ed"... yes) and it's going to take a lot of work to reach parity with the competition - who of course, aren't standing still. Nokia's engineers know how hard this task is, having laboured to put them in Symbian (and lately into Meego).

The short-term danger is that customers turn away from this year's Nokia Symbian offerings for 2011, declining to spend money on a dead-end platform. Perhaps this is overstated, as Symbian had poor take-up as a "platform" for content and applications in comparison to Apple and Android.

So Harlow talked last night about how Symbian will be "continuously renewed". The only thing that can assure investors in the long run is great Windows devices, but they are some way away. And even after the latest press statements (and cynical leaks of hurriedly-drawn device mockups to Engadget), nobody knows when that will be. ®

Bootnote

It's worth putting Black Friday in perspective. Nokia lost $8.7bn in value as shares slid, to value the company at $35bn. Nokia's value in November 2007 was $148.5bn.

High performance access to file storage

More from The Register

next story
Broadband Secretary of SHEEP sensationally quits Cabinet
Maria Miller finally resigns over expenses row
A black box for your SUITCASE: Now your lost luggage can phone home – quite literally
Breakfast in London, lunch in NYC, and your clothes in Peru
Skype pimps pro-level broadcast service
Playing Cat and Mouse with the media
Beat it, freetards! Dyn to shut down no-cost dynamic DNS next month
... but don't worry, charter members, you're still in 'for life'
Like Google, Comcast might roll its own mobile voice network
Says anything's possible if regulators approve merger with Time Warner
EE dismisses DATA-BURNING glitch with Orange Mail app
Bug quietly slurps PAYG credit - yet EE denies it exists
Turnbull leaves Australia's broadband blackspots in the dark
New Statement of Expectations to NBN Co offers get-out clauses for blackspot builds
Facebook claims 100 MEEELLION active users in India
Who needs China when you've got the next billion in your sights?
Facebook splats in-app chat, whacks brats into crack yakety-yak app
Jibber-jabbering addicts turfed out just as Zuck warned
prev story

Whitepapers

Mainstay ROI - Does application security pay?
In this whitepaper learn how you and your enterprise might benefit from better software security.
Five 3D headsets to be won!
We were so impressed by the Durovis Dive headset we’ve asked the company to give some away to Reg readers.
3 Big data security analytics techniques
Applying these Big Data security analytics techniques can help you make your business safer by detecting attacks early, before significant damage is done.
The benefits of software based PBX
Why you should break free from your proprietary PBX and how to leverage your existing server hardware.
Mobile application security study
Download this report to see the alarming realities regarding the sheer number of applications vulnerable to attack, as well as the most common and easily addressable vulnerability errors.