Nokia: Q2 dreadful, but at least it's closer to Windows Phone 7

Is Nokia is prepared to carpet bomb the planet with Windows Phone 7 devices hitting every price point so it can recover from its lost 2011?

For Nokia CEO Stephen Elop, the launch of Windows Phone 7 devices can't come soon enough. After all, Elop has to be tiring of talking about Nokia's dreadful financial picture. One big question is whether Nokia is prepared to carpet bomb the planet with Windows Phone 7 devices hitting every price point so it can recover from its lost 2011.

And the other big question: Will consumers buy these devices?

On a conference call with analysts following another disappointing quarter, Elop said that Windows Phone 7 will open up new markets and geographies to Nokia. "With Windows Phone 7 there are market opportunities that open up to us," said Elop. Specifically, Windows Phone 7 Mango devices will bring the company to CDMA markets. Nokia will also appear in more markets---let's assume the U.S. would be one emerging market for the company.

Elop wasn't prepared to detail anything about specific Windows Phone 7 plans, but hinted announcements would come. Analysts are expecting Nokia's earnings call three months from now to yield more concrete information. For now, Nokia is merely hinting at what's on deck.

For analysts, the only thing that matters for Nokia is the Windows Phone 7 launch and its follow up. And frankly, the follow up may be more important. Analysts are even willing to overlook another weak quarter because no one is surprised by it. Barclays Capital analyst Jeff Kvaal said in a research note:

The near-term outlook still remains difficult, with a relatively stale product portfolio, meaning 3Q will be another weak quarter for revenue, although margins are expected to be slightly better than forecast. The key for the stock, however, remains Nokia's portfolio transition at the mid-range and high-end, regarding which we will start to gain greater insight later in 3Q11 as Nokia's first WindowsPhone nears launch. We also consider it key for Nokia to follow up rapidly the first launch with additional WindowsPhones at lower price points in order to refresh the key mid-range of their portfolio.

The upshot to Kvaal's take is that Nokia can't win with one super Windows Phone 7 device. The company needs to machine gun them around the globe quickly so it can defend its market share and then dent Android.

In the meantime, Nokia continues to walk through its personal valley of death and the disappointing quarters that come from being shellacked by Android and Apple around the world. Nokia posted a loss of 368 million euro ($523 million) as sales fell to 9.28 billion euro, down 7.3 percent from a year ago. But those bottom line figures don't tell the true tale. Check out the device sales plunge.

And then the carnage by region.

Elop noted that the results were "clearly disappointing," but at least Nokia flushed out excess inventory and revamped management. Nokia is just trying to stabilize until Windows Phone 7 saves the day---maybe.

Also see: CNET: Nokia reports big Q2 losses, but CEO notes progress

Related: Nokia launches N9: Hints at Windows Phone 7 approach

Show Comments