Year in review 2012: Nokia's oscillating fortunes worry the industry
The news: Working for Nokia must be a challenging and exciting occupation. Throughout 2012 the company seemed to face daily question marks over its future while its workers bravely soldiered onward. The company had a rollercoaster ride during the year, going from bullish reports on its new smartphones, down to rumours of the company being sold, or of running out of cash.
The year started well with Credit Suisse commenting that Nokia's partnership with Microsoft to use Windows Phone may begin to pay off this year as operators search for a third smartphone platform to complement Apple's iOS and Google's Android.
In February, CEO Stephen Elop was praised by the technology research firm Canalys for "proving effective at driving the change and he should be credited for that." This came after Elop had cut another 4,000 jobs, bring the total number of planned job cuts to over 30,000 since he was appointed in October 2010.
Fitch Ratings also joined in by claiming that Nokia's robust cash position provides breathing space for the company to challenge the two leading suppliers and make the transition to a new smartphone strategy.
However, this bubble of optimism was punctured by S&P as it cut its rating on Nokia to the lowest rung of investment-grade territory, followed a month later in April when Nokia said its key Devices & Services unit would post a financial loss in the first quarter of this year. The shares dropped to their lowest level since 1997 on the news.
By mid-year, industry analysts had turned against Nokia as they became worried about the company's cash burn rate. The most bearish viewpoint saw the company's €4.9 billion net cash buffer completely gone by 2013.
Weeks later, Nokia announced it would cut as many as 10,000 more jobs, and that its second quarter loss would be larger than anticipated. This double dose of bad news triggered speculation that Nokia had become a potential takeover target.
Have rebuffed stories of Lenovo making a bid, Nokia's Elop said in August that the company remained committed to the Windows Phone platform. Bankers and analysts remained watchful, indicating that the success of a promised new smartphone portfolio could dictate the future of the company.
The September of the new Nokia 820 and 920, hailed by Elop as an "important step," failed to be the game-changer the financial industry was hoping for. "Nokia's new Windows 8 devices will unlikely alter its muted smartphone market share trajectory in an ever more competitive smartphone market," a Deutsche Bank analyst said.
Elop ploughed on into the autumn regardless of gossip that he had until early 2013 to demonstrate he can rejuvenate the ailing company through its partnership with Microsoft. Good news started to reappear in October with Nokia's sixth consecutive quarterly loss being less than anticipated due to stronger-than-expected sales of its low-cost Asha handsets.
The company was buoyed by further good news in the final month of 2012 with China Mobile agreeing to launch the Lumia 920, causing Nokia's share price to jump 8 per cent on the day. And then in December Sweden's Tele2 reported that it had sold out of Lumia 920s. Nokia goes into 2013 with cautious optimism but still faces numerous challenges.
Why it was significant: The world needs a rival to Apple's iOS and Google's Android, according to the industry. The combination of Nokia and Microsoft does hold potential to become a force within the smartphone sector, but Nokia's violent oscillations from near-boom to near-bust' worry analysts and consumers alike. However, the latest Lumia smartphones have been reviewed well and gained a small following in the latter part of 2012, and could maintain the company's upturn into 2013.
The bad news during the first nine months of this year might be over, and confidence, albeit very fragile, appears to be growing. Nokia's partnership with Microsoft remained stable during the year, and the new Windows Phone 8 operating system also attracted positive comments. These two firms might, if they have the time, be able to build on Nokia's shaky comeback that was glimpsed over the final three months of 2012.
- 3Year in review 2012: Nokia's oscillating fortunes worry the industry