Nokia (NYSE: NOK) announced today that it will be reporting its third-quarter earnings a week from today, October 20. Will we see more of the same, or the first signs of its turnaround? Actually, probably both.
The handset maker, currently gearing up for its big annual Nokia World show on October 26-27, is very likely to unveil the first of its Windows Phone handsets at the event.
This new line of smartphones, announced back in February by CEO Stephen Elop and Microsoft’s CEO Steve Ballmer, is the centerpiece of the company’s new strategy to turn around a slowdown in device sales and its particularly challenging position in smartphones — a growing area with huge competition from Apple (NSDQ: AAPL) and Android device makers, where Nokia was trying to keep up with its legacy, flawed Symbian platform.
Come next Thursday, Nokia is likely to post numbers that will demonstrate that the company is still seeing big declines in its world-wide market share of devices, and ongoing declines in terms of sales.
One additional area to watch is the health of the channel sales: A report from Gartner covering Q2 worldwide device sales in August noted that although Nokia was still looking alright in sales in Q2, that was likely because of retail channels “destocking” already-shipped devices. “However, we will not see a repeat of this performance in the third quarter of 2011, as Nokia’s channel is pretty lean,” wrote Gartner analyst Roberta Cozza at the time.
But that may not be the whole story: Nokia may well have cut enough costs in the last few months, which will show up in this quarter and Q4, that might mean its earnings could actually end up looking not half-bad.
We can probably debate until the cows come home about whether Nokia is really taking the right approach here, so drastically changing its business to focus it around a platform it did not create itself. Many have championed both sides of the argument, and the many nuances in between involving curve balls like the MeeGo OS that Nokia has put to one side.
But more immediately for those watching earnings, the cuts (and savings) will be Nokia’s way of demonstrating to analysts and investors that it is following through decisively on that strategy that it laid out in February — a strategy that, it should be pointed out, caused initial concern in the market as the stock dropped quickly in value in the days following the announcement.
For the past several months, Nokia has been pushing through a number of cost-cutting and streamlining changes at the company, outsourcing that Symbian piece to Accenture; shutting down certain projects, consolidating others; closing down factories focused on its feature phones; and laying off thousands in the process.
Nokia yesterday also took one more (baby) step in its attempt to streamline its services and brand portfolio: a new URL for its newly-branded app storefront, the Nokia Store, went live, as spotted by the blog All About Symbian. This is the new name for the Ovi Store, which Nokia announced it was ditching as part of its reorganization plan. Confusingly, the Ovi name is still all over parts of the site, such as the promotion on the home page and the technical support pages. The Ovi URL remains active, too.