Best of the Week
Most Popular
1. Market Decline Will Lead To Pension Collapse, USD Devaluation, And NWO - Raymond_Matison
2.Uber’s Nightmare Has Just Started - Stephen_McBride
3.Stock Market Crash Black Swan Event Set Up Sept 12th? - Brad_Gudgeon
4.GDow Stock Market Trend Forecast Update - Nadeem_Walayat
5.Gold Significant Correction Has Started - Clive_Maund
6.British Pound GBP vs Brexit Chaos Timeline - Nadeem_Walayat
7.Cameco Crash, Uranium Sector Won’t Catch a break - Richard_Mills
8.Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - Dan_Amerman
9.Gold When Global Insanity Prevails - Michael Ballanger
10.UK General Election Forecast 2019 - Betting Market Odds - Nadeem_Walayat
Last 7 days
U-Turn or Perfect Storm? Globalization at Crossroads - 22nd Oct 19
Stock Market Indexes Struggle and TRAN suggests a possible top - 22nd Oct 19
Fake Numbers Fueling the Wage War on Wealth - 22nd Oct 19
A Look at Peak Debt - 22nd Oct 19
The Coming Great Global Debt Reset - 22nd Oct 19
GamStop Became Mandatory - 22nd Oct 19
Learn to Spot Reliable Trading Setups: ANY Market, Any Market Time Frame - 21st Oct 19
How To Secure A Debt Consolidation Loan Even If You Have A Bad Credit Rating - 21st Oct 19
Kids Teepee Tent Fun from Amazon by Lavievert Review - 15% Discount! - 21st Oct 19
Stock Market Stalls: Caution Ahead - 21st Oct 19
Stock Market Crash Setup? - 21st Oct 19
More Stock Market Congestion (Distribution) - 21st Oct 19
Revisiting “Black Monday Stock Market Crash October 19 1987 - 21st Oct 19
Land Rover Discovery Sports Out of Warranty Top Money Saving Tips - 21st Oct 19
Investing lessons from the 1987 Stock Market Crash From Who Beat it - 20th Oct 19
Trade Wars: Facts And Fallacies - 20th Oct 19
The Gold Stocks Correction and What Lays Ahead - 19th Oct 19
Gold during Global Monetary Ease - 19th Oct 19
US Treasury Bonds Pause Near Resistance Before The Next Rally - 18th Oct 19
The Biggest Housing Boom in US History Has Just Begun - 18th Oct 19
British Pound Brexit Chaos GBP Trend Forecast - 18th Oct 19
Stocks Don’t Care About Trump Impeachment - 17th Oct 19
Currencies Show A Shift to Safety And Maturity – What Does It Mean? - 17th Oct 19
Stock Market Future Projected Cycles - 17th Oct 19
Weekly SPX & Gold Price Cycle Report - 17th Oct 19
What Makes United Markets Capital Different From Other Online Brokers? - 17th Oct 19
Stock Market Dow Long-term Trend Analysis - 16th Oct 19
This Is Not a Money Printing Press - 16th Oct 19
Online Casino Operator LeoVegas is Optimistic about the Future - 16th Oct 19
Stock Market Dow Elliott Wave Analysis Forecast - Video - 16th Oct 19
$100 Silver Has Come And Gone - 16th Oct 19
Stock Market Roll Over Risk to New highs in S&P 500 - 16th Oct 19
10 Best Trading Schools and Courses for Students - 16th Oct 19
Dow Stock Market Short-term Trend Analysis - 15th Oct 19
The Many Aligning Signals in Gold - 15th Oct 19
Market Action Suggests Downside in Precious Metals - 15th Oct 19
US Major Stock Market Indexes Retest Critical Price Channel Resistance - 15th Oct 19
“Baghad Jerome” Powell Denies the Fed Is Using Financial Crisis Tools - 15th Oct 19
British Pound GBP Trend Analysis - 14th Oct 19
A Guide to Financing Your Next Car - 14th Oct 19
America's Ruling Class - Underestimating Them & Overestimating Us - 14th Oct 19
Stock Market Range Bound - 14th Oct 19
Gold, Silver Bonds - Inflation in the Offing? - 14th Oct 19
East-West Trade War: Never Take a Knife to a Gunfight - 14th Oct 19
Consider Precious Metals for Insurance First, Profit Second... - 14th Oct 19

Market Oracle FREE Newsletter

Stock Market Trend Forecast Oct - Dec 2019 by Nadeem Walayat

Is Nokia's Management Insane?

Companies / Tech Stocks Sep 06, 2012 - 09:31 AM GMT

By: Janet_Tavakoli


Best Financial Markets Analysis ArticleYesterday Nokia's management kicked the company in the stomach and then self-immolated. At the most important meeting in the history of the company, Nokia's management blew it.

Why was this meeting so important?

Nokia has become a classic investor's value trap. Theoretically it trades below book value, but that "book value," even with a valuable patent portfolio, is difficult to monetize. Meanwhile, it's burning cash. This is despite Nokia's selling around one million handsets per day in the lower end of the market. Its smartphones are a different story. Apple and Android have 85% of worldwide market share, and Nokia has other competitors beyond that.

Moreover, Foxconn's subsidiary, the one that manufacturers a good chunk of Nokia's (but not Apple's) products, reported a record loss for the first half of 2012. It's moving farther north in China to cut its costs. It's struggling.

Nokia's debt has been downgraded to junk after years of losing market share. It's in a competitive market wherein target customers often already have contracts with carriers and won't switch, if they'll switch at all, until their contracts are up, and Nokias competition is much more savvy at marketing their products. You can have the best product in the world, but it counts for nothing, if you don't sell it. Nokia developed great Windows 8 Lumia smartphones, and it needed to ROCK the presentation.

I made a speculative bet on Nokia when the stock got crushed a few weeks ago. If Nokia nailed its presentation, the company would have a shot at not just pulling out of its tailspin, but persuading investors it would provide a reasonable return. It would be icing on the cake if Microsoft announced an investment for debt relief, maybe even a merger.

But shortly after Nokia's management mounted the stage to deliver their inept presentations, I laughed out loud at myself, and I dumped the stock. Throughout the day other investors threw in the towel, and by the end of the day, the crazy-volatile penny stock was down 16%. It was as if someone had challenged Nokia's management to kill the company in one day with an anti-sell campaign.

Throwing Away Success

First let me say that Nokia makes a honey of an attractive smartphone, and Apple admits that unlike Samsung, Nokia's flagship product won't invite a patent infringement lawsuit. Nokia's Lumia 820 and 920 models have ultra-bright high resolution displays with true black contrast. Nokia claims one can read the display in ultra-bright sunlight without worrying about glare. It's protected with gorilla glass. There's no jitter on the display when you move; it's the smoothest display delivery in the business. It has Pureview, a high-res camera with a floating Zeiss lens and will take great low-light photos. You have an option for cordless recharging. The specs say the phones weigh just over 7 ounces.

But there's more. Many businesses, including mine, use Windows (over 85-90+% of the business market), and having a Windows 8 compatible ecosystem--phones, tablets, computers and more-- is a plus for business owners.

Nokia's management could have ROCKED their presentation, but they have a special genius for deflating expectations about their ability to sell phones.

We Can't Hear You Now

Nokia's smartphones have a lot of great features, but they are--first and foremost--communication devices. They are phones.

Yet on the most important presentation in the fight for Nokia's survival, the sound cut out. Really? Technical glitches are forgivable by your audience if you're selling, say, soap, but if you're a tech company selling phones, you must demonstrate your technical ability to deliver sound. Listeners in remote locations couldn't hear for a time, and many may have tuned out because of this SNAFU.

More than that, once people can hear you, you must deliver a good presentation. Can't Nokia put someone onstage who looks cool and who seems to have passion for the products?

Nokia's Stephen Elop looked as if he were casually dressed for a funeral. EVP of smartphones, Jo Harlow, looked like the anti-Harlow. She dressed as if she were a frumpy version of Ninotchka. This was their moment to shine and explain to consumers how excited and happy they are about their own products, not to suggest that they arrived to bury them. Microsoft's Steve Ballmer later threw his arm over Elop's shoulder doing his Uncle Fester impersonation. Between Ballmer and Elop, Elop looked like the cool guy in the photo. It's as if Microsoft's lack of marketing savvy is contagious.

One might have been able to get past the appearance of Nokia's management, if it hadn't piled on with zero presentation skills. If they bothered to get any media training, it didn't show. Aren't you sick of hearing about a "journey?" When Elop pulled out this tired marketing sound bite, I was ready to write Nokia's board to suggest they encourage him to hit the road.

Everyone wanted to know when the phones would be available, the identity of the carriers, and the price of the phones. Unfortunately, Nokia didn't tell us. Instead it said the phone will be available in select markets. But Nokia wouldn't tell us which ones.

We Can Hear Apple Now

Apple is hard on Nokia's heels, and it will present its new iPhone 5 next week. Apple does what Nokia can't seem to do. It gets people excited and talking about its iPhones, it can put the phones on store shelves shortly after its presentation, and it can sell the bejeezus out of its iPhones. Apple sells more smartphones in a week than Nokia sells in an entire quarter.

Nokia's Madness Continues: Fake Ad

If Nokia hadn't already done enough to lose the respect of investors, it put another nail in its marketing coffin by faking a Lumia smartphone ad. The idea of the ad was to show the Lumia's optical image stabilization when the smartphone is in motion (the ad's bike rider was using the device). Nokia used the fake ad at its press conference yesterday.

The Verge, a tech site, uncovered the ruse when it noticed a window reflection of the man in a van holding a camera, obviously not a smartphone--great detective work. Nokia's previous smartphones proved the Pureview technology, so the reason for Nokia's faking the ad is unclear. You can't make this stuff up. Nokia admitted to the fake ad and apologized.

Nokia's stock tanked another 6% after the apology.

By Janet Tavakoli

web site:

Janet Tavakoli is the president of Tavakoli Structured Finance, a Chicago-based firm that provides consulting to financial institutions and institutional investors. Ms. Tavakoli has more than 20 years of experience in senior investment banking positions, trading, structuring and marketing structured financial products. She is a former adjunct associate professor of derivatives at the University of Chicago's Graduate School of Business. Author of: Credit Derivatives & Synthetic Structures (1998, 2001), Collateralized Debt Obligations & Structured Finance (2003), Structured Finance & Collateralized Debt Obligations (John Wiley & Sons, September 2008). Tavakoli’s book on the causes of the global financial meltdown and how to fix it is: Dear Mr. Buffett: What an Investor Learns 1,269 Miles from Wall Street (Wiley, 2009).

© 2012 Copyright Janet Tavakoli- All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules