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back to article After Black Friday, Nokia acts to halt share slide

Why did investors who rallied to Nokia two weeks ago, when new CEO Stephen Elop hinted at a Microsoft deal, desert the company on Friday? The market wiped $17bn off Nokia's share price on Black Friday, once the strategy was disclosed, with the stock losing almost 14 per cent in value in a day. The fall continues: three per cent …

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Elop should pick up the phone

Elop should pick up the phone, his village is calling him and they sorely miss him.

Nokia has spent 15 years instilling an "Everything but Microsoft" mentality into its user populace. Most nokia smartphone users have moved to Nokia in the days when the choice was between WinMob and Nokia and has liked the change. Otherwise they would not be a Nokia user.

Most of that populace will not pick up a Microsoft phone. As a Nokia user I can say - I could have swallowed a move to WebOS or even Little Britain "No, But Yes, But No" Java AKA Android. I am not however going to buy a Windows handset. That is the reaction of most Nokia smartphone users I know and the market is simply picking up the vibe and reflecting it onto the share price.

The only thing to keep Nokia smartphones afloat at this point was the brand loyalty most of which was fuelled by an Anti-(Microsoft/Apple/Google) sentiment. Elop just spat all over that. The market is correct in reacting to this. It is simply the messenger which shows what the users who were going to buy these phones think about this idea.

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Shareholder revolt

Of course the shares would go down! Anyone with any kind of hindsight would know that the ones who have gone into such deals with Microsoft have suffered a silent death. However, I don't think that selling Nokia stock is the real solution.

Shareholders should be voting to fire Elop and reinstate someone more Finnish; someone who would kill this retarded Microsoft deal. Save Nokia before it's too late!

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Anonymous Coward

I'm sure the shareholders are interested in your buying habits

Not.

After losing billions in money down the drain (because Qualcomm technology moved on and Symbian became liability not an asset) and huge amounts in future sales (because of the sliding market share which is why the stockprice is so low) if you were a director of Nokia would you care about the opinion of people in this forum with an 'opinon' or about whether Wayne and Tracy will respond to a nice advertising campaign featuring the kidz on the TV. I'm pretty sure you'll not be getting the call.

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RE: I'm sure the shareholders...

...are not that dense and stupid like you are, Anonymous Coward, posting your ignorant crap about Nokia market cap:

"and huge amounts in future sales (because of the sliding market share which is why the stockprice is so low)"

No, it's because ELOP JUST WROTE OFF THEIR ENTIRE INVESTMENT IN R&D, SOFTWARE AND TOOLS AND TRAINING AND EVEYRTHING THEY HAD SUNK IN SYMBIAN AND MEEGO OVER A DECADE, you village idiot.

Market is simply reflecting what this utterly clueless, careless, incompetent ex-MS corporate beancounter said and did, that's all. It's ALL Elop and his utter inability to command such a huge ship like Nokia - he is unable to carefully communicate, absolutely useless to prevent or even just properly predict things.

Elop personally WIPED OFF almost ONE-THIRD of Nokia's value in as little as FOUR DAYS - what is it if not absolute and utter INCOMPETENCY?

This former corporate cubicle-dweller is simply NOT UP TO THE JOB, period. They should get rid of Elop, regardless where Nokia goes, he's a failure already.

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Anonymous Coward

Obsolete Pairing

A mediocre operating system onto an out-of-touch hardware provider - A recipie for irrelevance and obscurity.

No wonder the share value is on a death slide - you can only polish a turd for so long, before they wake up and smelll what you've been shovellin'

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Anonymous Coward

Action was unnecessarily drastic

The reason investors are so rattled by this move is simply that the CEO has wiped out any value in the company in a single stroke. If he had said that a joint venture with Microsoft was an interim step or sideline while Nokia got the rest of its house in order, e.g. developed a compelling alternative platform, we could at least believe that Nokia had something unique going for it.

But he's burned the whole lot. Nokia is reduced to me-too Windows phone workshop. All hope of further innovation or breakthroughs have been extinguished. I'd be running too if I had any investment in Nokia.

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I want Symbian not WP7

I've been a loyal Nokia customer for 12 years. I love my Symbian phone and I actively chose it over Android because it had features I needed that Android didn't have (surprising though that may sound), although Android ran it very close. I never even considered a windows phone, there didn't seem to be much point. If Symbian is being dumped for WP7, then my next phone will be an Android, which won't come from Nokia.

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If you want to keep it better get a good case

There is another side to these news which the press has not got its hands on just yet.

One thing which Nokia has always been famous for were spare parts. You could repair a 5 year old phone or buy spares even for it. These were sold at a very reasonable premium with bits like covers or keypads often costing half the cost of a new phone. In fact, IIRC, Nokia was making a higher margin on accessories than on the phones themselves.

That is now dead. I had an order placed for a few bits for mine and my wife's phones a couple of weeks back and was starting to order what happened to the usually flawless availability. I just got order updates on all that they have been discontinued.

I guess so long and thanks for all the fish. So much for the idea of making "premium" hardware.

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Grenade

Who cares..

I've worked for plenty fortune 500 companies and the one thing I've come to realise is share price has no relation to the future of a product. Yes I know that the share price SHOULD be taking into consideration future earnings etc but SO many times I've seen this contradicted. Too many "mom&pop" investors who don't know shit just basically gambling money away. In this case it's ZOMG MS invading..evil..What rubbish.

Next pay I think I'll pick up a few nokia shares. IMHO they have a bright future ahead of them. They where never an OS company, symbian etc showed that. What they are is a great handset manufacturer wrt hardware and now that all the crap OS development etc has gone out the window they can save some cash and redirect effort to create great handsets once again with a great OS. Yes WP7 is a great OS and MS seems to have learnt a few lessons about controlling hardware specs and GUI to get a consistent user experience out of it..

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Money to burn?

> I'll pick up a few Nokia shares

Yep, they'll be dirt cheap and will continue to fall.

What an odd and risky strategy for a CEO: wiping out any added value in a stroke and reducing a venerable company to a box shifter.

Wonder what the next shareholder meeting will be like -- odds are that Elop will be out on his arse.

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Jobs Horns

and so the Microsoft astroturfers begin..

<<the one thing I've come to realise is share price has no relation to the future of a product.>>

When a company is being stalked by serial predator Microsoft, share price *is the future of your company*, the product no longer matters, maximising how much it costs Microsoft to steal it is all that's left.

Every deal Microsoft makes is a predator-prey relationship, the only way to win is to not play.

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Re: Who cares..

"Yes I know that the share price SHOULD be taking into consideration future earnings etc but SO many times I've seen this contradicted. Too many "mom&pop" investors who don't know shit just basically gambling money away."

Oh right: it's the "mom&pop" investors making all the market movements. "Mom" sells ten million shares. Meanwhile, "Pop" is busy shorting the stock big-time. Hello? When the price dips by 15%, especially when everyone was hyping a potential deal, it isn't the supposedly clueless, small-timers selling their shares.

But if you think you "know shit", go right ahead and buy Nokia.

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Gates Horns

Lets not forget

Its been said many times in these forums in stories about Nokia's sudden conversion to WP7 that Elop is ex-Microsoft and probably serving his former masters more than Nokia.

Look at the multi-way patent wars going on in the mobile space in the US (and other territories).

Look at how many patents Nokia owns WRT mobile technology

Look at how owning lots of mobile patents is the key to survival and/or crushing your competitors into compliance/oblivion

Look at how Microsoft would love to own all those patents to rule the mobile world like it has the PC desktop

See how Nokia share holders have seen the value of their investment drop: "Nokia lost $8.7bn in value as shares slid, to value the company at $35bn. Nokia's value in November 2007 was $148.5bn."

See Nokia shareholders watch as the value of their investment tanks further thanks to Elop serving his Redmond masters by converting an "Anything but Microsoft" company into a nice compliant box shifting Microsoft Disciple.

Imagine how Nokia shareholders will react after years of falling share prices, when Microsoft comes along to end their pain with a nice take over offer. Perhaps at a premium but on a share price that has massively tanked.

It all becomes clear now. Lots of patents picked up on the cheap by a fat patent troll.

Outlook not so good :(

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Anonymous Coward

Did you pick up some Rover shares at the time?

I bet you did, so why don't you share your advice on that as well.

The similarities are striking. Rover was a "dead man walking" for a long time, but kept afloat by the grey hair brigade and "I will buy made in Britain" mentality. Nokia smartphone have been kept similarly afloat by the Microsoft/Apple/Android refuseniks brigade.

The moment Rover announced that its next car will be an Indian rebadge and made in India it sales dropped to virtually 0 and it was dead in 3 months. Trust me it will be extremely entertaining to watch the next few Q analyst calls with Nokia and how they will be trying to explain the dive in their sales figures and market share.

The primary cost in _ANY_ established competitive market is the customer acquisition cost. If you got a recurring customer you should sing Halleluya instead of treating it like this: http://www.despair.com/service.html

That however is probably too difficult of a concept for a chickin wing peddlar who has gotten his "big company" epaulettes from force-feeding unwanted new releases to captive customers in a monopoly market.

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receiving end

Believe me it could be even worse.

When MS bought the company I worked for we had several phases...

a) MS didn't buy the company, a number of us had share options that converted to cash on company purchase. So what MS did was to buy all the IP and transfer all of us to MS, neatly leaving a shell company 'on the shelf' with zero value. Sure we could convert those share options to cash, but the cash equivalent for a zero value company was zero, tough luck. If you want any value stick with us 3 years...

b) MS then made us all 'happy' with a decent package while they implanted many of their own managers into senior positions and routed out the 'real value' in terms of people, skills and snippets of code.

c) MS then closed everything down with gagging orders on those who took redundancy (I didn't I took a move then resigned).

The process took about under 3 years to complete, a decent product was scrapped, 85% of the workforce redundant, the original company destroyed with nothing left for any silly enough to hope for a future....

For Nokia I suspect the process will be a little slower.

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Hey, Savvy Investor!

Got a great share tip.

SCO. Can't fail. "To Teh Moon"

As Confucious is reported as saying

"Eat shit. A trillion flies not wrong."

Tens of thousands of Nokia investors not wrong, either, I guess...

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Unhappy

next shareholder meeting

> odds are that Elop will be out on his arse.

Not in my experience. The asset strippers and investment funds will keep him there while they sell off anything valuable that remains, then they'll sell the ruins cheaply to someone who wants the IP. Sun & Schwartz comes to mind :(

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Stop

RE "Who Cares"

The sheer number of thumbs down this post has received just amazed me, the readers of the Register seem to have picked up a bizarre blindspot around Nokia that ignores current market realities.

Nokia is no longer a real player in the smartphone sector, which is the only growing phone market. Following this strategy shift, now it is; maybe. Depends on whether WP7 can catch up in time.

I imagine the shareholders abandoning the company have bought into the same Nokia-love nostalgia that has infected most commenters on here, and so feel betrayed. Perhaps a lot of them were nationalistic Finns. Almost certainly none of them have noticed the sands shift under Nokia's feet in recent years

Go on, thumb this down for pointing out these little facts

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Headmaster

Sorry to have to do this Reg...

"But this doesn't mean Microsoft is providing nine-figure marketing and engineering support - as the headline on the original wire report suggests."

A billion is 10 numbers, 9 is at least 100 million and at most 999 million, 999 thousand, 999.

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FAIL

Simple really

Microsoft see it as getting WP7 the market share Nokia has delivered in the past.

Nokia see it as a cheaper, easier and more profitable root to regaining share lost against the latest new kids on the block.

So that looks to be financially sound and a profitable business decision to back. What it doesn't factor in is the public's demonstrated dislike for Windows as a mobile platform and the time it will take to make WP7 compete, if it gains traction at all. A far less promising prospect.

Nokia has burned its bridges, turned about-face to embrace what it has stood against for a decade and more and, for many, may as well have announced it was getting out of the mobile business. It's going to be a long haul to pull WP7 to the top, if at all possible, and most investors will see that.

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Paris Hilton

Share price movement simplified.

Buy on rumour, sell on facts.

Alas Finland, I'm sad to say you now have your own Nortel.

Paris, cause she knows about going down big time.

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Jah

Perhaps the market thought the answer was to be Anroid

Nokia have nil skills in Win Phone software. Elop not only did not choose Android, easier for a MeeGo company to adopt, but also reduced Nokia to a "business", that is, strategy is simply a business case. Wrong! Nokia is much more than a company. It is the flagship European tech company and a company that once had a vision and was innovative. Now its just a hardware company and a distribution network. No longer a hub of European tech. Sorry to see the demise of Nokia.

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Gates Horns

Well duh...

On Thursday, Nokia had IP worth billions, an ecosystem they controlled and the largest existing smartphone userbase, plus the largest marketshare in the past year and second largest in the last quarter.

On Friday, Elop told the world all that was worth nothing.

Of course the shares fell!

FWIW, I'm still strongly of the opinion that Nokia should properly have focussed on fixing the Symbian UI and keeping their own ecosystem and control of their own destiny. They are now irrelevant.

Satan the Bill, because that's what he is to Nokia shareholders, customers and staff.

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Choosing CEO's...

Maybe this is a wakeup call to the lazy investors and boards of companies all over the world.

Some one who has FAILED at other companies is probably NOT the person you want running your company.

Elop FAILED at MS hence why he was 'available' - he had sod all else to do.

The guy in charge at Symbian for the last 2 years as it went from profitable company to a giveaway bailed out by the EU taxpayer hardly had that illustrious career (though he is again CEO of a tech company).

The guy who sank HBOS is now running Boots.

The list goes on.

Elop has gone from useless at MS to sinking Nokia. He will succeed in sinking it if no one gets in the way and stops it NOW. The investors and board won't. He will take a huge bonus, a golden handshake and leave in a couple of years with a valueless box shifter worth no more than a couple of euros in his wake. MS will pick up whatever they want - probably without even paying for it as part of the 'strategic alliance' and you may find some interesting payments to various 'family members' and 'friends' have taken place but you'll have to look hard.

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lost value

By my estimate Nokia shares have lost the equivalent of 15yrs of salary for the entire group of Symbian developers in 2 days. Is this an adjustment based on wiping off the R&D cost of Symbian altogether?

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What are they thinking

I realise I'm not privy to all the financial shenanigans that accompany these kind of announcements. However as an outside observer this move looks insane. Didn't someone suggest to Nokia how some of Microsoft's other "partners" fared?

Nokia has survived so long by producing distinctive phones which marry good hardware with good software. Sometimes it works perfectly, sometimes it doesn't. But it's their product from end to end and people buy a Nokia phone because of it. Now they're just another Windows Phone amongst many. Why will any consumer choose a Nokia phone over an HTC / Samsung / generic WP7 when they all run exactly the same? How can Nokia compete against Far East companies anyway?

That's not to say their current strategy was sound. Symbian is old and MeeGo was just weird. I think they both had to get the chop eventually but I think webOS or Android would have been far more suitable and viable platforms to go to while preserving the distinctive Nokia brand of yore.

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Insane?

"However as an outside observer this move looks insane. "

I really don't agree, unpopular as this opinion would seem to be

"Nokia has survived so long by producing distinctive phones which marry good hardware with good software. Sometimes it works perfectly, sometimes it doesn't. But it's their product from end to end and people buy a Nokia phone because of it."

Nokia haven't just survived, of course, they've driven things in the past, dominated the landscape. When mobiles "arrived", people preferred them because the software was intuitive and the signal & battery was great. That then made the Nokia brand reputation.

BUT, that period of Nokia driving the growth of mobile is gone - in the smartphone sector (the only growing sector) people DON'T buy Nokia BECAUSE they own the product end-to-end. In smartphones, it's all about what you can do with them. If you're in the Symbian garden, all you can do is compare with your iOS & Android mates and wonder where you can get a golf range-finder app or AR graffiti game too, and wonder why none of the small ultra-creative developers are building anything for you. iOS & Android are running away with the show

I kind of agree with you that Android is a better brand fit, but there is the extra element of tying yourself to the ultra-successful money machine that is Google. With Android, you really are just one of the pack. At least in WP7 there is a degree of differentiation, plus the Xbox/gaming angle

Nokia and Microsoft are on the same thinning ice, and both are running the risk of slipping into insignificance in the sectors they once dominated. One has a great track record in hardware, the other "specialises" (I know, I know) in software. To anyone who doesn't care what Nokia has previously "stood for", and to anyone who thinks Microsoft is being pushed off the top table, it looks like a great match

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"Symbian circa 2001"

hahahahaaaa .... Oh Nokia, what have you don't?

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Why did the share price tank?

My guess is that the market did not expect a 100% switch to Windows Phone 7. Maybe the expected the introduction of some Windows Phone 7 phones, and maybe some Android phones as well, but not the wholesale "sod Symbian, sod MeeGo, we'll put everything on WP7".

They've just trashed their current portfolio at a stroke.

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Farewell Nokia.

I am truly sorry to see the end of Nokia like this. If they had gone down the Android line and applied their skills at power management and phone technology to it, they would have made a serious competitor to Samsung, HTC and the rest.

Now, they are irrelevant and certainly won't be making any future sales to this long time Nokia user.

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Shorting the stock

I have a short order on NOK stock at the moment. Bought in at 11.72 and it is currently at $8.80 and dropping.

Woohoo... Go for that MS deal boys. You are making me a bagful.

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