Nokia rapidly burning through cash reserves as marketshare collapses
Tuesday, May 22, 2012/
Market analysts are increasingly concerned about Nokia’s financial position, with the company reportedly rapidly burning through its cash reserves.
Reuters is reporting that Nokia’s cash reserves have fallen from 10 billion euros in 2007 to 4.9 billion euros, despite being paid $US1 billion a year by Microsoft to use the Windows Phone platform. The losses also appear to be accelerating, with 2.1 billion euros wiped from the company’s reserves over the past five quarters.
Meanwhile, Credit Default Swaps for the Finnish phone maker have risen from 309 basis points in January to 749 basis points last Friday, while Standard & Poor’s has downgraded two outstanding bond issues to junk-bond status.
Earlier this month, Nokia claimed strong sales in the US for its Windows Phone 7-based Lumia smartphones, however, a recent IDC report revealed a 23.8% year-on-year fall in Nokia’s overall marketshare and a massive 50.8% fall in its marketshare for smartphones. The IDC survey was confirmed by a Nielsen survey showing the US smartphone marketshare for Windows Phone 7 (1.7%) is miniscule compared to either Google Android (48.5%) or Apple iOS (32%).