Why Nokia’s Recent Boost Won’t Last Long
We all know that Nokia (NYSE: NOK) has been struggling to keep up with other mobile device manufacturers like Apple (Nasdaq: AAPL) and Samsung (LON: BC94). That’s why it joined up with Microsoft (Nasdaq: MSFT) in February 2011, hoping to marry its hardware with an up-and-coming mobile software contender.
Well, that really hasn’t worked out so much for the Finnish company. The stock has lost 80% of its value since the partnership began.
The company did report slightly better-than-expected earnings today, though, which boosted its share by 16% at one point. But don’t expect the uptick to last much longer.
Manoj Ladwa, Senior Trader at TJ Markets explains: “The amount of money that they’ve got on their books – which was slightly better than expected… Well, that’s down to cost cutting. They’ve reduced jobs drastically over the last couple of years or so. They’ve had to on the back of reduced demand for their product.”
In other words, Nokia’s current cash situation has zero to do with its smartphone sales, and everything to do with giving employees the ax. Not a very sustainable strategy.