In the process of trying to come up with ideas to compete with companies like Apple and Samsung, Nokia seems to be burning through money in a fashion that would see it go bankrupt in a few years. However, it’s been reported that along with a 1.53 billion euro loss for Q2 FY2012, Nokia has got a cash reserve of 4.2 billion euros, half a billion more than analysts had predicted. This news led to an eighteen percent rise in the share price of Nokia. Not too great, considering the share price has dipped 80 per cent since February 2011. While the sales of the new Lumia phones have doubled from the previous quarter, it still has not managed to grab a big share of the market. While the Nokia Windows phones sold a modest 4 million units, 30 million iPhones and 50 million Samsung devices were sold.
Analysts are mixed regarding Nokia’s latest results. Some analysts say that the end of Nokia is near and CEO Stephen Elop’s days are numbered if he cannot manage to pull off a miracle over the next two quarters. Other analysts feel that there is a ray of hope for Nokia. CFO Timo Ihamuotila agrees that the financial situation is deplorable, and that Nokia needs to first cut 10000 jobs and focus on spending its finances in the R&D sectors. While Nokia’s net cash reserves are more than expected, it is still down 0.7 billion euros from the previous quarter. While its operating activities generated over 100 million euros, Nokia shelled out 742 million dollars in dividends. Nokia’s collaboration with Siemens has definitely helped Nokia’s position. Nokia Siemens Network has generated above-expected profits and an improved forecast for the next quarter.
An analyst from Ovum, Nick Dillon believes that this offers Nokia a fighting chance. Nokia’s position has also improved since many investors had made bets on falling prices, and rushed to short-sell their stakes when the reports were released. However, many believe the results of the third quarter will not be much better, and many believe that Nokia has not made any fundamental fixes to their problems. Some are worried that Nokia has placed too many of its bets on the Windows phones. This does not offer a scope of a backup in the event that the sales of the Windows phones do not increase soon. If the situation does not improve over the next two quarters, the investors will definitely be asking for Elop’s head on a platter.
