Nokia (NYSE:NOK) CEO Stephen Elop defended his company's embrace of Microsoft's (NASDAQ:MSFT) Windows Phone platform as its primary smartphone strategy amid scathing criticism from shareholders who urged the company to try a new tack in its battle to regain market share.
Elop came under withering attack at the company's annual shareholder meeting but stuck to the company's strategy of building Lumia-branded Windows Phone products as the best way to compete with Apple (NASDAQ:AAPL) and companies such as Samsung Electronics that are using Google's (NASDAQ:GOOG) Android platform.
In the first quarter, Nokia's Lumia shipments increased to a record 5.6 million, but its total mobile phone shipments (including low-end feature phones and high-end smartphones) fell to 61.9 million, down 25 percent from 82.7 million in the first quarter of 2012.
"You're a nice guy ... and the leadership team is doing its best, but clearly, it's not enough," one shareholder, Hannu Virtanen, told Elop, according to Reuters. "Are you aware that results are what matter? The road to hell is paved with good intentions. Please switch to another road," he said.
Shareholders approved a proposal by Nokia, first announced in January, to suspend the company's dividend as a way to preserve cash. Still, investors vented their frustration with the pace of Nokia's turnaround. Nokia first embraced Windows Phone in February 2011 and released its first Windows Phone products in the late fall of 2011, but has struggled to gain traction since then.
"We make adjustments as we go. But it's very clear to us that in today's war of ecosystems, we've made a very clear decision to focus on Windows Phone with our Lumia product line," Elop argued. "And it is with that that we will compete with competitors like Samsung and (Google's operating system) Android."
According to the Wall Street Journal, investors said Nokia isn't displaying "the spirit and charisma" that Apple has. Apple sold 37.4 million iPhones in its most recent quarter and raked in the majority of the smartphone industry's operating profits in the period. Elop didn't directly address the comparison to Apple's "charisma" but said Apple's share price has dropped recently and that the iPhone 5 represents only incremental improvements. According to the Journal, he rhetorically asked if Apple was "still cool?"
Elop acknowledged that Samsung can spend much more on marketing than Nokia can, and so Nokia has to be smarter and more disciplined. Elop noted that deep restructuring, including the loss of tens of thousands of jobs since he took over in the fall of 2010, have dramatically reduced costs and are "important for our future," but added "we're not out of the woods yet."
Juha Varis, senior portfolio manager at Danske Capital, which owns Nokia shares, told Reuters that he thought Elop had chosen he wrong path. "He has closed doors," he said. "They don't have new ideas now. Their fate is all in Windows Phones."
Nokia is expected to unveil a new Lumia product next week at a May 14 event in London. The company also launched an official teaser site for a high-end phone called the Lumia 928, which Verizon Wireless (NYSE:VZ) will reportedly carry. The Lumia 928 will sport Nokia's PureView imaging technology, which enhances picture quality, especially for low-light photography, as well as optical image stabilization technology and a Carl Zeiss lens. Nokia has lately been touting its imaging capabilities as one of its key differentiators.
- see this Reuters article
- see this WSJ article (sub. req.)
- see this AllThingsD article
- see this The Verge article
- see this TechCrunch article
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