Ruminations on the electronics industry from David Manners, Senior Components Editor on Electronics Weekly.
Nokia Up For Grabs
The speculation in the back bar of Helsinki’s Sir Eino Olutravintola is that Nokia is up for grabs and that Microsoft or Samsung are the most likely purchasers. Samsung went out of their way to deny it.
Losses and restructuring costs of around Euros 2bn over the next couple of years could wipe out the company’s cash balance, according to Societe Generale.
It is estimated that Nokia will run out of cash next year at its present burn-rate. Nokia had Euros 4.9 billion in cash at the end of March. At the end of December it had Euros 5.6 billion and, at the end of March 2011 it had Euros 6.4 bn. Nokia has Euros 4.75 billion of debt.
At $3 the Nokia’s shares have fallen 90%in 5 years.
In the five years, that is, since the launch of the iPhone. That year , 2007, Nokia’s shares were worth $28.
Nokia’s market cap is $11 bn. At one time it stood at over $200 bn.
At $11 bn, Nokia’s market cap is not much more than ARM’s market cap at $10 billion. Incidentally the stricken STMicro’s market cap is $4.7 billion now that ST shares are down to $3.
Nokia management went mad. They declared themselves to be a software and services company.
In fact they depended on phone sales to survive.
Having misidentified the business they were in, Nokia management focused their energies in the wrong areas.
What they needed was a product guy CEO – someone who could make a stunning, covetable, pure-sex phone.
What they got was Stephen Elop, a software guy who presided over the launch of the dreary Lumia.
Those whom the gods would destroy they first drive mad.
Thor, or some gloomy old Nordic god, drove the Nokians crazy.Tags: burn rate, cash balance, grabs, lumia, stmicro