* Shares down over 20 pct since Lumia launch
* 14 analysts recommend buy, 15 say sell
By Tarmo Virki, European Technology Correspondent
HELSINKI, Dec 21 Nokia's long-awaited Windows
phones may be too little, too late in the smartphone war
dominated by Apple and Google, despite positive reviews by
Its first Windows model, the Lumia 800, has won little
interest from consumers, with only 2 percent of Europeans in the
market for a smartphone saying they would pick it, according to
a survey by Exane BNP Paribas.
Analysts said there was nothing particularly wrong with the
sleek-looking handsets, other than a sofware glitch on some
models affecting battery life, but consumers were just not
Smartphones using Microsoft software have just a 2 percent
market share, compared with Google Android at around 50 percent
and Apple at 15-20 percent.
"There isn't much room left for a third ecosystem. The
smartphone market is consolidating fast," said Bernstein analyst
Pierre Ferragu who rates Nokia a "sell".
Nokia's shares have fallen over 20 percent since the Oct. 26
launch of the new phone, with investors fearing Nokia would be
unable to claw back the market share it has lost in the past
several years to rivals like Apple.
Phones using Nokia's old Symbian software, which it decided
to dump in favour of Microsoft, are still in circulation and
outsell Windows phones 10 to 1.
But as Nokia keeps shifting to Windows, sales of Symbian
have a lot of room to disappoint over coming quarters and some
analysts are warning of lower dividends and weaker-than-expected
Now even Microsoft has started to hedge its bets, making its
software increasingly available for rivals to Windows Phone.
Smartphones are built on mobile computing platforms, and the
most modern combine web browsers, navigation systems, cameras
and portable music systems. A so-called "feature" phone -- a
market Nokia still dominates -- has far fewer of these
Nokia officials defended the Lumia, and a spokesman said
there was "positive momentum" while declining to give any data.
One executive argued that Nokia had never counted on the first
Lumia phones to lead to a quick turnaround but instead expected
it to be the first step towards recovery.
In fact, there are just as many analysts recommending a
"buy" on the shares as there are "sell" ratings.
Those who are keeping the faith believe the new assault on
the smartphone market may be enough to give Nokia a place at the
Many of them say the range of concerns over the Finnish
company are fully priced into the shares, while the company's
strong cash position and some prized patent assets could attract
a takeover approach.
"With current, and upcoming models, Nokia can win back
market share in both -- in feature phones and in smartphones,"
said Swedbank analyst Jari Honko, who rates the shares a "buy".
"Today's share price does not take into account any recovery in
the Nokia market position."
Optimists also cite an improvement in Nokia's product
portfolio, which looked out of date when Stephen Elop took over
as the chief executive in September 2010.
And while some argue there is no room for a third
alternative to Google and Apple, some developers and operators
do see room for more competitors in this market.
The 2012 Windows 8 upgrade could also attract a wider
audience by making the way smartphones, tablets and PCs work
For investors, the biggest positive surprise could be an
acquisition offer. After Nokia signed a deal with Microsoft,
rumours of full takeover by Microsoft or at least buyout of
smartphone unit have made rounds on a weekly basis.
Last week the stock jumped 4 percent when Danske Bank
suggested Microsoft could buy Nokia's smartphone unit.
But even if investors do not get a rich buyout - online
gambling company Unibet is putting odds on Microsoft buying
Nokia in 2012 at just 1 out of 15 - analysts say the company's
relatively-solid finances should at least offer some security.
Nokia had 1.36 euros per share of cash at the end of the
last quarter. It also has a strong patent portfolio - on its own
worth more than a euro per share - and owns top digital mapping
firm Navteq and half of No. 2 mobile network gear maker Nokia