Having created a positive buzz around its Q4 results, Nokia’s key challenge moving forward is to sustain this momentum. Currently, there is a lot of skepticism about whether the company can do that. The plans for the current quarter suggested device margins of negative 2 percent, with a 4-point window on both sides. Further, the decision to hold back on dividends for the first two years had many investors peeved. As a result, Nokia’s share fell 8% in trading last week as concerns about sustainability grew.
In the fourth quarter of 2012, Nokia saw Lumia shipments grow to 4.4 million, which is 4 times the number from Q4 of 2011. Unit sales of the low-end full-touch Asha phones grew by 45% owing to high demand in emerging markets. Nokia’s transition to Windows Phone OS made leaps as the PureView 808 was officially declared the last Symbian phone. Nokia’s JV with Siemens, Nokia Siemens Networks, reported a record operating profit of 14.4%. All in all, the company brought in the New Year on a good note with a $592 million operating profit in spite of losses in the first half of 2012.
Nokia’s future depends largely on the Windows Phone ecosystem. In that respect, Microsoft seems to have a promising future, even though it is only marginally used so far. Windows Phone 8 comes from the same groundwork as Windows 8, and the company hopes to drive its millions of PC users to the new smartphone OS. The integration of the two operating systems is also pro-developer as apps can work on both. Nokia’s main reason for denying dividends this year was to reserve cash for the Windows Phone migration. Therefore, a large Windows Phone wave, with Nokia riding on top of it, is essential in 2013 for the sake of the tech giant.
Nokia Siemens Network is often the ignored cousin within the Nokia family, but 2013 is the year of that cousin. As many countries move from 3G to 4G this year, NSN will benefit from additional 4G LTE deployments. Moreover, TD-LTE, an adaptation of LTE being used mostly in countries like India and China, holds a lot of potential for NSN. The JV already has high targets for North America, with contracts with T-Mobile and U.S. Cellular. Capitalizing on NSN’s abilities will also be integral to Nokia’s sustained growth.
