John Paczkowski

Recent Posts by John Paczkowski

Diving Bell Locates Nokia Share Price

Investor reponse to Nokia’s profit warning today was quick and brutal. Shares in the company plunged some 18 percent after the struggling handset maker warned that profits in its phone division would be worse than expected in both the first and second quarter. Nokia’s stock price is just $4.38 as I write this.

Today’s warning — Nokia’s second in less than a year — shows the near-Sisyphean task the company has before it as it works to muscle its way back into the smartphone market. And as much as CEO Stephen Elop says Nokia’s leadership is doing its damnedest to “increase the clock speed of the company,” recovery is still a long way off.

“We see a continued risk that Q2 proves weaker than even the new guidance implies,” Nomura Equity Research’s Stuart Jeffrey wrote in a note to clients this morning. “Moreover, unless new feature phone models are an instant hit, there is a risk that Q3 will see another leg down in earnings.”

With its shares at this level, Nokia’s market capitalization has fallen to $16.25 billion. That’s getting close — if you consider within $2 billion to be close — to the level of Nokia’s cash position, which as of Dec. 31 was $14.2 billion. That would, in theory, make it an easy acquisition target for a cash-rich suitor like, say, Microsoft, which as of Dec. 31 had nearly $52 billion in combined cash and short-term investments. If the share price keeps falling, an acquirer like Microsoft could take out Nokia almost for free, or for a small premium, assuming that Nokia can, in its current state, demand one.


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