Nokia (NOK) had a pretty tough week. Its share price dipped to a historical low of $1.77 intra-day on Wednesday. The bigger test however will be next week when Nokia reports its quarterly earnings on July 19.
It is almost market consensus that the numbers are going to be bad. But how bad? I believe we can get a clue about the speed of decline from several aspects.
First is the loss of Symbian phone sales. The system has been declining so fast that it is safe to assume away all sales of the Symbian system. Moreover, Nokia will perhaps be losing money on every Symbian (0.9% market share) smartphone it sells.
Second, Lumia 900 hasn't lived up its potential as many expected. I have been tracking Lumia 900's sales rank at Amazon's cellphone bestseller list. Over the past week, it has been bouncing up and down quite a bit. The black Lumia 900 was as high as 10th rank and as low and 23rd rank. Overall, the average rank is perhaps around 15th. This is consistent with the recent report by Nielsen that Lumia sales in the U.S. have been disappointing, occupying merely 0.4% of the market.
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Translating into numbers, based on the following sales records from the last quarter, Nokia's smartphone sales would likely drop to around 5 million units, including both Windows Phone and Symbian based system. Lumia 900's sales, based on Amazon's sales rank and my estimation, will be less than 2 million units. That is a pretty dire number.
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Source: Nokia quarterly earnings report
Since Microsoft (MSFT) has announced that Windows Phone 8 is coming out in October, many consumers will wait. Overall, I expect Nokia to not have a a miserable earnings report but also issue lower guidance for the next quarter. Investors should stay clear of the stock prior to the earnings report.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
