Nokia reports its operational and financial result for the second quarter of 2012 this week, on Thursday 19th July, 2012. The past, present and near-term outlook is unlikely to be pretty. The vendor remains under pressure from Apple, Samsung, ZTE and others. What four main points should investors and competitors keep an eye on?
1. Nokia's global handset shipments will be around 10 to 20 million units behind Samsung's, something that would have been unthinkable just a couple years ago. A downturn in Symbian and China volumes have been among the main issues. More detail can be viewed in our published handset forecast for the quarter here.
2. Operating profit margin for the devices division could well be negative again for the second straight quarter. A sharp slowdown in shipments has caused a dowturn in profitability.
3. How fast are Microsoft smartphone volumes growing? They should be up at least a half sequentially. Anything less will be discouraging.
4. Critically, we would like to hear the CEO, Stephen Elop, talking a little more positively. Arguably, he has long been throwing around too many negative words like "burning platform" and "disappointing". This can demotivate stakeholders. Despite the obvious challenges Nokia has, it is time for the CEO to start emphasising, and re-emphasising, some recent positive moves. For example, Nokia's handset marketshare has sequentially doubled in the valuable US market, reversing a decade of shrinkage. Mr Elop would be wise to remember the first Apple iPhone flopped in year one in 2007. So far as we can recall, Steve Jobs rarely spoke negatively during that tough time, and the rest, as they say, is history.