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Summary:

Shares of Nokia plummeted after the world’s largest handset maker posted a brutal quarter and a loss of $832 million. And while the company raised its industry outlook for the rest of the year, its dissolving presence in the U.S. is particularly worrisome. And there’s not […]

Nokia_logo2Shares of Nokia plummeted after the world’s largest handset maker posted a brutal quarter and a loss of $832 million. And while the company raised its industry outlook for the rest of the year, its dissolving presence in the U.S. is particularly worrisome. And there’s not much reason to expect that figure to turn around anytime soon in the face of increasing competition from the iPhone — which continues to eat Nokia’s lunch — as well Android and Palm’s webOS.

Nokia took a staggering write-off of nearly $1.4 billion in Nokia Siemens Networks, the joint venture with Siemens that has become a financial albatross for both companies. Meanwhile, net sales fell to $14.62 billion, down from $18.18 billion in the year-ago period, as the company suffered from a shortage of components across its product portfolio.

The write-down of Nokia Siemens Networks wasn’t entirely surprising — as Om noted nearly a year ago, the recession has hit the entire telecom industry hard by forcing network operators to pay off debt rather than upgrade their networks. And Nokia offered a ray of hope for the handset market, predicting a 7 percent increase in 2009 from last year rather than its previous forecast of a 10 percent drop.

But the company continues to lose traction in the U.S. at an astonishing rate, with North American sales down more than 31 percent over last year. Nokia may indeed be the dominant mobile player in the developing world, but it’s becoming less relevant by the day in North America.

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  1. And yet despite the constant reports of its demise Nokia has still managed to retain a 38% market share and was profitable in the handset market.

    Clearly it’s a poor result but when you realise they aren’t even in the game in the profitable smartphone market, it’s not so bad at all. The N900 is coming out within days, so Nokia will finally have a competitive phone in the smartphone market.

    I think Nokia very much has its work cut out in the US and while it should make every effort to break in, it shouldn’t hold its breath. Even when they had the best phones they had tiny market share in the US and the brand just isn’t synonymous with quality like it is in Europe and Asia. At the same time the US has a love (some would say fetish) for homegrown Apple that is not going to wane in a hurry. But, if Nokia can dominate the smartphone market in India and Europe it will make a lot of money.

    1. As a US consumer, I’ll interpret the above apology to mean that Noika has just given up, doesn’t want to be competitive, is OK with being banished from the consumer mindshare and doesn’t want my money. Would love to hear what the principal investor in Nokia think about just giving up on the most lucrative market in the world ( US smartphones ).

      That’s cool, weird, but col, I guess.

    2. One additional point. Outside the US too, expect more competition from LG & Samsung (especially) + the usual suspects. Those 2 in particular are very strong brands and can gain MSS. I guess when you have a MSS as high as they have, its hard to grow (in light of a tough comp enviornment) and its easy to go down. One key issue to me is that they seem to have an extensive smartphone product line which only creates customer confusion. I wouldnt hold my breath on N900 – heard the same for all the previous models. This company is starting to look more like Sony (dominant player in the consumer space, innovators took share away in every one of its product lines). My 2c anyways..

      1. Check out any of the hands-on demos of the N900 and you’ll see it’s a serious phone. Better than the latest iphone? I think that depends on your preferences, but for a large number of people the answer will be yes.

  2. Om must be unhappy. But thats just the way Nokia dug itself into.
    They had two plus years to compete with APPLE.
    Someone said “Stay Hungry and Stay Foolish”.

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