Thursday, January 24, 2013
Nokia to Omit Dividend and gain profit
http://www.bloomberg.com/news/2013-01-24/nokia-to-omit-dividend-for-first-time-in-143-years.html
The article discusses the fact that Nokia will skip a dividend for the first time in at least 143 years as the company retains cash for its comeback attempt. According to Bloomberg dividend forecast, the company was projected to forgo a payout. Nokia hoped that the payout omission will “ensure strategic flexibility”.
Once the world's largest smartphone maker, Nokia has lost more than 80 percent of its market value since then and fallen outside the top-five smartphone makers. But it started to recover its income with the rising of sales of Lumia, one of their products. Right now, the company is making progress with its cost reduction by 1 billion euro over a year. I think it is also important for them to boost sales and get consumers buy more Luminas. Also, the company needs to keep up with the technology to provide products that not only cheap but also highly functional. But the company is heading in the right direction, and their products are significantly more competitive than they used to be last couple of years.
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One of the main things that Nokia needs to do is integrate its devices together. Companies like Apple and Samsung have seen tremendous success for this very reason as they have made their devices extremely compatible with each other. Nokia's dependence on a singular smartphone model may be what has slowed them down. However, I am curious to see what the next step is for Nokia and how they plan on regaining a significant amount of market share.
ReplyDeleteOver the past 5 or so years, Nokia has lost most of its brand loyalty; their phones were known for being durable, and hence they lasted a long time. This is why they were a popular phone of choice on the African continent! Soon people realized they wanted, and could afford a more innovative device - that's how the rise of Samsung started.
ReplyDeleteFor Nokia, people believe the Windows Phone 8 launch was be an important catalyst for Lumia, one of their products. According to their reports, they've conducted a sufficient amount of analysis including cash flows, discount rates and growth rates. All this data has been updated to reflect their most recent projections, and as mentioned above, they are improving with regard to their competitors. Given that the indicators were primarily related to operating factors within Smart Devices & Mobile Phones, the company in general is fairly confident that they can somewhat retake the market share they lost, if not increase it.
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