Nokia feels heat as rivals cut prices
Nokia’s share price tailspin shows the jitters in both thestockandthe handset markets. Nokia’s stock slumped 9.6% last Friday after warningthatitexpected to lose market share in the third quarter.
In the current financial climate, investors are lookingforbadnews. They marked down the stock even though thehandsetleaderstill tips 10% growth in unit sales for the full yearsandthinksit can grow market share.
Nokia sold 435 million phones in 2007, with a marketshareof37.8%, according to Gartner.
The warning tells us something about the state oftheglobalhandset market. Its competitors are buying marketsharewithprice cuts, but Nokia says it won’t follow them down.
“Nokia has not broadly participated in therecentaggressivepricing activity - as it believes that thenegativeimpact toprofitability would outweigh any short termincrementalbenefits todevice unit sales,” it said in a statement.
Nokia said delays in getting a new mid-level device tomarkethadalso affected sales.
Of course, the economic crunch is slowing sales in EuropeandtheUS. But
Gartner’s head of mobile device research, CarolineMilanesi,spunit positively, noting that the fact that Nokia took solong tofeelthe impact of the financial crunch was “almostreassuring”.
Consumer electronics is a treacherous business. OfNokia’sthreemain rivals, Motorola is flatlining and Sony Ericssonhasalreadyissued two profit warnings this year.
But Nokia’s strategy of high-volume, low-cost phonesintheemerging markets and a steady stream of new middleandtop-endproducts is a robust one. It’s all up to theexecution.
Posted by NetWork
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