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Author Reuters: Nokia could burn through its cash as soon as next year
Tsepz_GP
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Posted: 2013-07-03 16:03
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Nokia’s decision to pay $2.2 billion to buy out the remaining stake in the Nokia Siemens Networks business is expected to put a major strain on its cash reserves, Reuters reports. In fact, Reuters notes that the combined pressures of paying for the NSN acquisition and maintaining its handset business mean that the company “could burn through its cash as soon as next year.” Pohjola analyst Hannu Rauhala tells Reuters that this could further erode Nokia’s position in the mobile market because “if they constantly have to be worried about the cash position, it restricts their ability to move, to react to changes in the market.” The surprise full acquisition of NSN has sparked speculation that Nokia may be planning to spin off its handset business to Microsoft, although Microsoft recently backed out of merger negotiations with the company because it was reportedly worried about Nokia’s low market share.


http://bgr.com/2013/07/02/nokia-cash-position-analysis/

Wall Street is now convinced that Nokia will sell its handset business


Here is a puzzle: Nokia’s cash position has suddenly shrunk from 4 billion euros to 2-2.5 billion euros… but the company’s share price is higher than it was before Nokia announced it will spend 1.7 billion euros to buy full control in Nokia Siemens Networks. Wall Street is feeling perfectly calm even though it now looks like Nokia’s cash burn during the second quarter may have been as high as 850 million euros. Why aren’t investors freaking out about A) the cost of the Nokia Siemens Network acquisition and B) the confession about the handset division cash burn level during spring? At this rate, Nokia may run out of cash during the summer of 2014.

The most plausible answer is that Wall Street is now convinced that Nokia is going to sell its handset unit.

There is no reason to worry about the cash burn rate or current cash reserves if the phone division will be gone by Christmas. Spending nearly half of its cash reserves on the NSN acquisition was such a bold gambit that few people believe that Nokia would have made it without having a clear plan for exiting the phone business.

Is it really this easy? Can Nokia find a buyer for its phone unit even if the most motivated suitor, Microsoft, turned it down as recently as June?

One thing is certain: very close attention will now be paid to Nokia’s June-quarter feature phone unit volume when the company reports its spring numbers. The 10 million unit feature phone volume miss was the biggest negative surprise in the company’s first-quarter report — Nokia’s feature phone erosion is what likely drove Nokia’s spring cash burn in the second quarter. That is the issue that may determine how much money Nokia will burn next winter, and whether that number is going to be big enough to scare off suitors.

Everything now rides on how Nokia’s Asha phone range fared against competition from cheap Huawei and Micromax Android phones in Johannesburg and Mumbai over the past few months.


http://bgr.com/2013/07/03/nokia-handset-unit-sale-analysis/
[ This Message was edited by: Tsepz_GP on 2013-07-03 15:04 ]
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randomuser
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Posted: 2013-07-03 16:24
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That is SAD

I don't really love Nokia but this is going to really bad. Never really though I'd see Nokia quit the phone business. I sure hope they don't but seems there isn't much hope.

Won't feel good to see Nokia go away.

Hopefully the EOS can help them consolidate market share.

BTW, where is Bonovox ? He hasn't been online in the past few days
[ This Message was edited by: randomuser on 2013-07-03 15:35 ]
razec
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Posted: 2013-07-03 16:56
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WTH, I might be a Sony/SE fan since 2005 but I've always regarded Nokia the brand that Introduces me to the world of mobile communication. I blame Elop for all this mess that's happening there.

Stupid Elop should've never been hired as the company's CEO, he's the termite that crippled the foundations of Nokia
[ This Message was edited by: razec on 2013-07-03 15:59 ]
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alenn
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Posted: 2013-07-03 17:23
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Yeah, so sad.Nokia's fault.Elop needs to go to jail.Not saying that WP is crap, but it was Nokia's worst mistake ever.
If they moved out of mobile industry, then start again as a different firm, then, they could start with MeeGo.Of course that's my dream.

Bonovox has said that he won't be visiting Esato anymore...
Here's the link.
bart
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Posted: 2013-07-03 18:21
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Let us wait for the EOS first.
Sometimes it only takes one device (with a bit of markething) to become very profitable.

But i do agree with the rest of the world when it comes to Elop, he needs to be locked up in jail for crimes against the world
With Ericsson and Nokia gone: we must keep their spirits alive and buy JOLLA or YOTA
Ranjith
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Posted: 2013-07-03 21:12
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This is Sad.
If NOKIA leaves..its the end of an Era.Ericsson,SonyEricsson,Motorola,Alcatel and NOKIA would have perished

Windows phones and NOKIA are great..i just hope for a miracle.I hope the other fa nboys wake and realize this is such a good product and most likely serves them better than what they have instead of following the herd.
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Away
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Posted: 2013-07-03 22:07
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JUST MAKE AN ANDROID DEVICE!!!!!

Do you know how many fans Nokia still has waiting for it to embrace android?
kewsvnet
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Posted: 2013-07-03 22:36
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yeah real shame if Nokia sell of the phone business!! i really do like their phones! I wish Nokia had not been exclusively using WP as the OS...their hardware on android would be fantastic...I could really see a Nokia resurrection with that!

not saying WP is crap infact I do like it in some ways...I just prefer the Google ecosystem which is best available on android...I really do not want to be using Bing as my default search, and I am sure there are plenty of people who feel the same way
cu015170
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Posted: 2013-07-04 00:40
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Nokia messed up big time.. bad management for decades would do that to any company. Its a shame because their engineering has been top notch for a very long time. Their R&D department was one of the best in the world..


On 2013-07-03 21:12:55, Ranjith wrote:
This is Sad.
If NOKIA leaves..its the end of an Era.Ericsson,SonyEricsson,Motorola,Alcatel and NOKIA would have perished


Software > Hardware ..

we know this from the PC business. The US software cartel has never been more powerful than it is today. Without Google Samsung/Sony/LG and the rest of the OEMs will be nowhere.

Let's just say that Google starts making Motorola phones, and it only provides android to itself.. the rest will be pretty much out of business.

Let's say that Microsoft buys Nokia, and starts making their own phones, and it only provides WP to itself.. the rest will be pretty much out of business.

Apple is already doing it.. so no need for a hypothetical scenario.

Of course, they wouldn't do that, but it gives you perspective.
goldenface
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Posted: 2013-07-04 01:11
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It would be sad if they off loaded their mobile arm. It would be the end of an era indeed, the amount of SE v Nokia discussions in these forums - the sparks really flew ha ha.

May be they just need to bite the bullet and take some tough discussions.
cu015170
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Posted: 2013-07-04 02:12
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Ericsson and Nokia were the pioneers of this industry..

It was a sad day when Sony finally bought Ericsson, and it will be the same if Nokia gets sold as well.
admad
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Posted: 2013-07-04 07:09
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Not saying that WP is crap, but it was Nokia's worst mistake ever.


It IS crap. Microsoft is the only company that's been involved in mobile OS for 13 years now. It should have the best experience in this area, however they Windows Phone OS is just years behind competition. For example such a trivial thing like 1080p screen support, AFAIK they are still working on it... Not to mention it's closed OS just like iOS, but Apple have epic fanboys, while the same can't be said for Microsoft, and many people don't fancy the complete lack of file manager.
Ranjith
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Posted: 2013-07-04 11:31
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I guess i have asked this earlier..dont remember

Why exactly isn't NOKIA attempting Android along with WP ,at this point?i mean as the last straw.Had they signed some WP-only exclusive deal with MS?
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Posted: 2013-07-04 14:11
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On 2013-07-04 11:31:37, Ranjith wrote:
I guess i have asked this earlier..dont remember

Why exactly isn't NOKIA attempting Android along with WP ,at this point?i mean as the last straw.Had they signed some WP-only exclusive deal with MS?



Because Elop is a Microsoft agent. His only task was to make Nokia buyable.

I've said it before. If I was a Nokia shareholder, I would have invested in the assassination of Elop a long time ago.

One reason given was because they would have struggled to differentiate themselves. So they chose an OS which looks the same on every device, where the specs are the same and the design of the devices is the same too.
Supa_Fly
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Posted: 2013-07-05 02:39
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On 2013-07-03 16:56:11, razec wrote:
WTH, I might be a Sony/SE fan since 2005 but I've always regarded Nokia the brand that Introduces me to the world of mobile communication. I blame Elop for all this mess that's happening there.

Stupid Elop should've never been hired as the company's CEO, he's the termite that crippled the foundations of Nokia
[ This Message was edited by: razec on 2013-07-03 15:59 ]



I too, as a former fan, would be very saddened if Nokia was to exit the cellphone business. However its all for not really.

1. If this occurs it'll be Nokia's second transition into a completely new business; remember they where textile before cellular for almost 100yrs (I think).
2. 2.5 Billion for the controlling sole entity stake in the chipset, base station, mobile network and cellular infrastructure business, amongst others. I have a BIG feeling they'll enter the M2M market as a leading mobile network infrastructure solutions provider and compete with BlackBerry for M2M channel business ... VERY lucrative.

I don't agree that Stephen Elop is the blame on this one for several reasons. Nokia, like BlackBerry was already in a downward sales, declining revenue, rapid market share loss over the past 2 years - I'd say very close to BlackBerry's at the very same time lines! Heck I'd even wager their stock price plummeted in concert. Stephen, either intentionally done himself or was a puppet to seal the deal with Windows Phone platform with Microsoft which actually has been keeping them afloat ALL this time!! Remember those un-reported exact figures of financial backing by Microsoft that completely went against the purchase our proprietary software model and we'll give you the world of services and infrastructure - IF the volume is right? So you cannot really blame him without concrete evidence his actions are the root cause. Also I highly doubt the previous executive team/guard would've kept Nokia afloat as long or fare any better ... remember, again like BlackBerry former management guidance and VERY slow action was the reason for the prolonged and step decline in the first place leaving the job open to Elop for CEO of Nokia.

The ONLY different between Nokia and BlackBerry is that BlackBerry never:
1. Gave up their core services infrastructure (services and software); Nokia killed OVI.
2. Re-invented their own mobile smartphone OS/Kernel with a major purchase that aligned them for M2M business,
3. Rid themselves of the partnerships with carriers and most importantly the infrastructure for a dedicated NOC and APN on over 600 providers (global) networks with a dedicated data pipe.

So what is Nokia doing in services or the future hold for them beyond the upcoming EOS device? One could argue that if Nokia went for Android, they may have been able to stomp a mud hole in Samsungs derriere before the SGS IIx debuted and other variants gained global traction/attraction. Hindset is 20/20 is it not?
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