Nokia Corporation used to be one of the key leaders in the international market of mobile devices. Nokia is well-known for the superior quality of its mobile devices and navigation products. The company develops and supplies cell phones and smartphones, mobile computers and applications, as well as Internet services like music and messaging (Yahoo Finance, 2011).
Nokia’s current financial profile is not very attractive: the company failed to retain its leadership in the smartphone market and has almost lost its smartphone business (Butcher, 2010). The company is fighting to restore its position in the financial market, and the price of its shares slowly increases. Whether or not Nokia manages to improve its strategic and financial position depends on the quality and efficiency of the new CEO’s decisions and actions.
Nokia, one of the leaders in the international market of mobile devices, is currently listed on the Frankfurt, Helsinki, and New York Stock Exchanges (Nokia, 2011). The latest closing data for the NYSE shows that the price of Nokia’s shares does not exceed $6.02 (Nokia, 2011; Yahoo Finance, 2011).
The 52-week range for Nokia is $5.81-11.75, and it is possible to assume that Nokia is currently near the bottom of its financial performance (Yahoo Finance, 2011). The company was able to improve its financial position in the NYSE, but its corporate future does not look very bright. The company is facing numerous strategic issues. At the end of May, Nokia announced that it would not be able to make any profits on phone sales (Arthur, 2011).
The company feels too weak against its competitors, Google and Apple: the former sells millions of cell phones with Android operating system, whereas the latter has turned its iPhone into the source of unprecedented profits (Arthur, 2011). The popularity of Nokia products in Europe and China is decreasing because of price (Arthur, 2011). Whether or not Nokia manages to improve its financial position depends upon the quality and efficiency of the new CEO’s strategic decisions.
At the end of 2010, Nokia decided to replace its CEO Olli-Pekka Kallasvuo with Stephen Elop, who used to be the head of a business division at Microsoft (Butcher, 2010). Today, Elop is Nokia’s CEO (Nokia, 2011).
Before Elop became the new Nokia’s CEO, he said that his main task was to lead the company through the period of change (Butcher, 2010). Elop was confident that superior financial performance was one of his main professional goals (Butcher, 2010). Little has changed since then: the company is losing its customers and cannot retain its position in the mobile devices market.
The company lost nearly 33% in stock prices over the last year (Yahoo Finance, 2011). Its payout ratio is 63.00% and its return on equity is 8.80% (Yahoo Finance, 2011). Apparently, Nokia is in the dire straits of the mobile devices business and needs an entirely new strategy to improve and capitalize its market position. Compared to 2010, investors holding Nokia’s shares have lost nearly 18%.
Nokia hopes that its new CEO will give an impetus to the company’s movement towards new strategic highs. Obviously, the company needs a major move to remain competitive in the technological age.
Positive changes in stock prices suggest that Nokia has a chance to revive itself against its competitors, but to make it happen, Nokia needs an entirely new strategic vision, mission, and direction. Years may pass before Nokia restores its position in the international mobile and cell phone industry. Until then, all Nokia can do is to fight with the ghost mills of its former popularity, while other technological giants are developing and selling brand new products.
References
Arthur, C. (2011). Nokia shares dive after sales warning. The Guardian. Web.
Butcher, M. (2010). Nokia’s new CEO has a mobile mountain to climb. Tech Crunch. Web.
Nokia. (2011). Investors resources. Nokia. Web.
Yahoo Finance. (2011). Nokia Corporation. Yahoo Finance. Web.