Feeds

Has Nokia bottomed out? El Reg drills into the detail

Is that light at the end of the tunnel or an oncoming train?

3 Big data security analytics techniques

Analysis When a company is in crisis, it wants to tell the world that it’s still got oodles of cash and is jolly busy putting things right. This is true even if you're Europe’s biggest technology company - right, Nokia?

The phone firm got the bad news out of the way first in its financial results this week. The company is €675m poorer than it was three months ago, a period in which the major ratings agencies have downgraded its bonds to junk status. The cash-flow portion of the results give an indication of Nokia’s current burn rate: it has drawn on €488m from operating activities in the first six months of the year, but only €102m in the past three months. Nokia raised €416m from flogging assets and investments, giving an overall cash drain of €514m for the quarter, or €940m for the first six months of this year.

So the haemorrhaging is slowing to an improbable dead calm. What about the revenue picture?

Contrary to what you might believe if you get your information the tech blog echo-chamber, Nokia does more than sell Windows Phones – incredible as this may seem. Overall sales fell five per cent from the first quarter of 2012, and although the company’s revenue is down by 25 per cent from a year ago, the crash has steadied.

Alas, and this may be a consequence of its European roots, costs have not (yet) been cut to reflect the lower revenues. The phones division sold €4bn worth of gear, but the gross profit of €729m is before a billion-euro bill for sales, marketing and R&D teams are accounted for. Opex was down 14 per cent.

That explains why the management announced the latest, most savage cuts a month ago, before the detailed results emerged today.

Nokia said it had shipped 4 million Lumia phones, and about 600,000 in the United States. So we must believe them, and Nokia did say "sold" not "shipped". Sold means "stays sold". Nokia still sells more Symbian phones (officially it isn’t called Symbian any more) than it sells Windows devices.

Net cash was better than expected, at €4.2bn.

However the worst part of the numbers is Nokia’s margins for the reasons outlined above. The company’s cost base hasn’t fallen as quickly as its revenues have fallen. Non-IFRS margin is 18 per cent, but it’s making a loss on each phone.

Nokia confessed it had overestimated the popularity of its smartphones. It will write down €220m worth of components which can’t now be sold in phones. Since this includes Lumia, Symbian and Meego handsets, we can’t infer that Nokia had overestimated the appeal of Windows. Not without more information.

So what’s the prognosis, then? Windows 8 is very near, which must be quite a relief. Nokia said that it was on top of Microsoft’s release cycle to OEMs. It was late to the party with Windows Phone 7 and had to take what was on offer. Now it was ahead of the curve. With the Windows mobile market as small and uncompetitive as it is, you wonder whether this makes much difference, and it doesn’t today. But it means that rather than lining up a 21-gun salute for what is effectively a pretty generic outsourced device (Lumia 800 and 900), it can start to produce distinctive devices again.

It wouldn’t harm Nokia if it could squeeze in the 41MP sensor found on the PureView into its Windows portfolio soon.

Nokia also said it hadn’t seen a fall in Lumia activations after last month’s news stories that Lumias won't run Windows 8.

In a reality check, Nokia supremo Stephen Elop reminded analysts his company needed to flog a lot of cheaper devices in Asia, where Android phones are now as cheap as chips, where Windows is still costly, and the Series 40 is not really competitive. Nokia watchers should probably look to this for the next indication in the company’s fortunes. We won’t really know what a Windows 8 smartphone world looks like until Christmas, or just afterwards. ®

Top three mobile application threats

More from The Register

next story
Virgin Media so, so SORRY for turning spam fire-hose on its punters
Hundreds of emails flood inboxes thanks to gaffe
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
AT&T threatens to pull out of FCC wireless auctions over purchase limits
Company wants ability to buy more spectrum space in auction
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
Google looks to LTE and Wi-Fi to help it lube YouTube tubes
Bandwidth hogger needs tube embiggenment if it's to succeed
prev story

Whitepapers

SANS - Survey on application security programs
In this whitepaper learn about the state of application security programs and practices of 488 surveyed respondents, and discover how mature and effective these programs are.
Combat fraud and increase customer satisfaction
Based on their experience using HP ArcSight Enterprise Security Manager for IT security operations, Finansbank moved to HP ArcSight ESM for fraud management.
The benefits of software based PBX
Why you should break free from your proprietary PBX and how to leverage your existing server hardware.
Top three mobile application threats
Learn about three of the top mobile application security threats facing businesses today and recommendations on how to mitigate the risk.
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.