Weak handset sales raise concerns about Nokia's turnaround

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Weak handset sales raise concerns about Nokia's turnaround

Weak handset sales raise concerns about Nokia's turnaround
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The questions continue about Nokia’s recovery as it released disappointing quarterly sales figures for smartphones and its basic models.

Its Lumia handsets were supposed to revive the company’s ailing fortunes, but the weak sales numbers put more pressure on chief executive Stephen Elop who bet the farm on using Microsoft’s untested Windows Phone software.

Nokia was one of the first smartphone makers and before Apple launched the iPhone and Google came up with Android software, it dominated.

But sales have tumbled dramatically. From a 41 percent share of the smartphone market in 2009, they dropped to 34 percent in 2010, 18 percent in 2011 and last year it had just five percent of the market.

Credit Suisse has estimated that they will fall to just two percent this year.

Android and Apple’s iOS together account for over 90 percent of smartphone sales, according to research firm IDC.

Smartphones are viewed as crucial for Nokia’s long-term survival because of their higher profit margins and increasing popularity.

Analysts said the fall in sales of its regular models – which were down four percent from the previous quarter – was a worry.

There are now fears among investors that Nokia could start to run out cash before its smartphone sales pick up sufficiently to save the company. It has lost more than five billion euros in the last nine quarters.

Its net cash reserves fell to 4.1 billion euros from 4.5 billion euros in the previous quarter, in line with expectations.

There are also some indications that the smarkphone market may be reaching saturation.

“The concern is that the high-end smartphone market looks weak across the board, whether it be weak numbers from HTC or BlackBerry, or Samsung coming in lower than expected. That’s going to make it tough for Nokia and Lumia volumes,” said Canaccord Genuity analyst Michael Walkley.