Nokia tears through cash reserves

By Allie Coyne on May 21, 2012 10:27 AM
Filed under Mobility

Quickly eroding back-up funds.

Nokia has burnt through €2.1 billion ($A2.7bn) of its cash reserves in the last 15 months as the former mobile giant continues to struggle against its smartphone rivals.

The company’s reserve currently sits at €4.9bn. Reuters reports analysts expect Nokia to spend a further €2bn in the next three quarters and possibly exhaust its entire reserves within the next year.

A Nokia spokesman told Reuters the company had a plan to improve cash flow.

"Nokia is implementing a decisive action plan to position our company for future growth and success," spokesman James Etheridge said. "The main focus of these actions is on lowering the company's costs, improving cash flow and maintaining a strong financial position."

Nokia posted a €1.6 billion ($A2bn) net loss for the last quarter, with its overall Q1 2012 sales results in line with earlier negative predictions.

Its net sales were down from €10.4bn ($A13.2bn) in the previous corresponding quarter to €7.4bn ($A9.4bn). Fourth quarter 2011 net sales were posted at €10bn ($A12.7bn). 

Remember to sign up to our CRN Channelwire bulletin to stay connected with the latest channel news and analysis from Australia and around the world.

The company has predicted similar results for its second quarter, thanks to “consumer demand related to new products”. Market leaders Apple and Samsung this year will release new versions of their flagship handsets.

The phone maker has in recent years struggled to keep up with its rivals in the competitive smartphone market. It last year unveiled the much-hyped Lumia line of handsets, a range it hopes will restore it to its previous glory.

Nokia sold over 2 million Lumia phones in Q1 for an average selling price of €220, a figure CEO Stephen Elop admitted was below expectations. 

“We are navigating through a significant company transition in an industry environment that continues to evolve and shift quickly,” he said in a statement. “Over the last year we have made progress on our new strategy, but we have faced greater than expected competitive challenges."

Nokia has hinted at cost reduction and “significant structural actions” if its plan to combat financial and market share decline by expanding the Lumia’s reach worldwide is unsuccessful. It earlier this year announced a restructuring plan that will see 4000 jobs at three of its manufacturing sites eliminated. 

The announcement did little to stir investors with Nokia’s share price closing steady at €2.23 last Friday.

Follow us on Facebook and Twitter

Copyright © CRN Australia. All rights reserved.


Nokia tears through cash reserves
Top Stories
Head-to-head: Surface Book vs MacBook Pro
See how the rivals' laptops stack up.
ACCC orders Telstra to drop wholesale prices
Applies to seven fixed-line access services from November.
Dell looking at EMC buyout, say reports
Would be largest technology sector deal on record.
Sign up to receive CRN email bulletins
Has consolidation gone too far in the telco/ISP industry?

Latest Comments
CRN Magazine

Issue: 342 | September 2015

CRN Magazine looks in-depth at the emerging issues and developments for the channel, and provides insight, analysis and strategic information to help resellers better run their businesses.