Time Is Running Out for Stephen Elop to Turn Nokia Around

Nokia Has to Consider Google Android in Two Quarters Should Windows Phone 8 Face Slow Adoption - Investors

by Anton Shilov
09/20/2012 | 08:06 AM

The clock is ticking for Stephen Elop, chief executive officer of Nokia Corp., as anger because of continuing slump of the stock is growing among investors and there is no light in the end of the tunnel because the strategy set by Mr. Elop simply does not work.


It has been nearly exactly two years since Nokia Corp. hired Stephen Elop to regain the dropping smartphone market of the world's largest maker of mobile phones. Since then, Nokia has lost position of the world's largest maker of smartphones, ceased to be the globe's biggest supplier of mobile phones, fired tens of thousands of its employees, closed down manufacturing facilities around the worl, ceased development of its own operating systems, sold-off its luxury phone division called Vertu and restructured the company's management for a couple of times.

Despite of all changes, Nokia still cannot turn itself around: sales of Symbian-based smartphones are slowing down, shipments of Windows Phone-powered devices continue to be low when compared to Apple iPhone or Samsung Galaxy S III flagship models. The company continues to make losses as its relationships with its partners among carriers and retailers are getting worse because of many reasons.

"Elop has not been able to attract customers and that is what counts. You can say that he has not had enough time, but he has been there for two years. Time is up," said Magnus Rehle, senior partner in Greenwich Consulting, in an conversations with Reuters news-agency.

Many investors hoped that Nokia's second-generation Lumia smartphones could attract a lot of interest and attention, but Windows Phone 8-based handsets did not inspire observers or financial analysts. At the same time, the new operating system means that Nokia will either fail to offer a low-cost Lumia smartphone, or will have to sell two types of Lumia: one with Windows Phone 7.8, which lacks compatibility with new apps, another with Windows Phone 8. All-in-all, the holiday season will unlikely help Nokia much.

"The Christmas season is a lost cause. For Nokia, if there is any chance, it will be Spring. The beginning of next year may be the final judgment. I think that maybe the end of the first quarter is the marking point," said Juha Varis, who holds Nokia shares as part of the Danske Invest Finnish equity fund.

In case Nokia fails to make Windows Phone 8-based Lumia handsets popular within a couple of quarters, to avoid fatal consequences, it should focus on rolling out smartphones running on Google's Android software for millions of consumers in emerging markets who often still prefer Nokia's brand, Mr. Rehle advised. At the same time, focusing on Android would mark defeat of Mr. Elop's Microsoft-centric strategy, which would naturally call for the CEO to resing.

"He is totally a Microsoft guy, so it is natural that he would have to step down then," said Mr. Varis.