Nokia heads for 'make or break' moment with new Lumia phones

The success of Nokia's new Lumia smartphones could dictate the future of the company, according to bankers and analysts, as expectations build that the vendor will unveil new devices early next month.

The company is set to unveil its latest handsets using Microsoft's Windows Phone 8 platform at its Nokia World event to be held in Helsinki on Sept. 5 and 6, just days before the likely launch of Apple's new iPhone 5. Nokia has also planned a media event in new York with Microsoft for Sept. 5.

Few have understated the importance of the new Lumia range with one unnamed "Nordic banker who knows the company well" telling the Financial Times: "I can't see much of a point in taking a bet on them one way or the other before September 5. It is make or break. Either it goes poorly and then I wouldn't touch it with a bargepole or, against expectations, it takes off."

The Finnish handset maker has seen its share price jump over 70 per cent in the past month, after hitting a 16-year low in mid-July of €1.33. However, Pierre Ferragu, an analyst at Bernstein, told the Financial Times that this rebound has little to do with any fundamental change in sentiment among investors and is more down to "short covering," where stock market traders who have bet on a falling stock price buy it back as it rises instead.

Ferragu added that stock traders had been conducting short covering in Nokia shares in recent weeks, and cautioned that there was still a chance of an unpleasant surprise when Nokia reports its third-quarter results.

"We know that a handset business once broken can deteriorate at a rate beyond the most pessimistic expectations. We believe today is a good time to initiate a new short position in Nokia," he told the Financial Times.

Worries still persist that Nokia has fallen too far behind Apple and Samsung Electronics to be able to regain momentum, despite operators keen to see a third strong competitor to Apple's iPhone and Google's Android, of which Samsung is the strongest proponent.

Separately, Nokia's Asha feature phones are proving attractive to consumers in China and India, boosting the company's share of the basic phone market to 35 per cent last quarter--the highest in two years, according to Bloomberg.

The handsets, which support Web access and online games, are winning over first-time mobile users in emerging markets who cannot afford a smartphone.

Anshul Gupta, an analyst at research firm Gartner, said that the Asha was gaining market share because the device resembled a smartphone, yet cost a fraction of the price. "They have almost all the features a smartphone should have like an application portal to download apps, a touch interface, social-networking integration -- so these devices are completely like a smartphone," he told Bloomberg.

For more:
- see this Financial Times article (sub. req.)
- see this Bloomberg article

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