I Warned You About Nokia

I Warned You About Nokia

Nokia's warning today was a long time in coming, and it isn't any surprise. To be certain, this isn't a "buying opportunity". Steer clear.

In multiple articles that I have written on this website before, I have warned about Nokia.  See Nokia Guarantees that it waill be next Motorola and Don't Get to Excited by Qualcomm - Nokia Settlement.   It looks as though several other people have written about Nokia and its problems as well.

Nokia is a company that has missed everything in hardware.  They could have been RIMM and they could have been Apple.  Instead, they chose to be a high-priced company with a bunch of ringtones and devices targetting 15 year olds.  The sold these devices at a premium as long as they could and took advantage of the global expansion and the power of their brand much longer than anyone would have imagined.  The average selling price of their phones, around Euro 120, was simply not sustainable long term. 

The world changed with Blackberry's extension into consumer markets and the IPhone.  Nokia could no longer sell their junk for Euro 120 when the same money gets you a fully functional email or internet device.  Even 15 year olds that Nokia targets have lost interest at Nokia's price point.

Nokia's warning today indicates they are warning for the quarter because they have chosen not to match the pricing pressure of their competition.  Well, the pricingg pressure isn't going away.  Rather, it is getting more intense.

And, then Nokia's next warning will relate to the fact that the global market is slowing.

This company's long term prospects are very, very bleak.

Sell and take losses, but don't short.

Ari Socolow
Ari Socolow: Ari Socolow is the Chief Economist and Editor-in-Chief at BestCashCow. He is particularly interested in issues relating to financial literacy and bank transparency. Since co-founding this website in 2005, Ari has been frequently cited in the media as an expert on local and national savings accounts, CD products, mortgage and loan products and credit card rewards products.

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