Nokia Gets a Taste of Its Own Medicine
Apr 11th 2012 6:23PM
Updated Apr 11th 2012 6:24PM
Investors pinning their hopes on a turnaround for Nokia (NYS: NOK) were hit with more bad news today. The world's largest mobile-phone maker issued a profit warning for the company's fiscal first quarter that sent shares tumbling to a 15-year low. However, a weaker sales outlook is just the tip of a very large iceberg.
The Finnish company recently launched its new Lumia 900 smartphone in the U.S., where it hoped it would be met by strong demand. The flagship device is a big step forward for Nokia, because it showcases a partnership with Microsoft (NAS: MSFT) , in which the tech companies together are attempting to win back some share of the smartphone market.
So much for a hassle-free phone
However, the Windows-based smartphone that was supposed to spur Nokia's turnaround has a problem with suddenly dropping high-speed data connections. That's particularly embarrassing for Nokia, because it spent months promoting the device with a marketing campaign called the "Smartphone Beta Test," in which it scoffed at glitches in Apple (NAS: AAPL) and Google (NAS: GOOG) phones.
Apple and Google currently dominate the mobile scene -- together commanding more than 80% of the U.S. smartphone market, according to comScore. That's in stark contrast to Microsoft's 4% share and Nokia's distant 1% claim on the industry. Complications with the new smartphone that was supposed to save Nokia could instead hurt the company if customers return the devices.
A bright side?
If anything positive came out of this setback, it was an opportunity for Nokia to showcase its impressive customer service. The company assured buyers that it would issue a fix for the problem on April 16. In the meantime, Nokia will try to buy consumers' forgiveness by offering a $100 refund to all customers before April 22, even if the bug didn't affect their device.
These are problems that simply can't happen if Nokia ever wants to make a meaningful comeback. For now, I've lost all confidence in the company's ability to regain market share. Instead of wishing for a turnaround at Nokia, find out what stocks are the three hidden winners of the smartphone revolution in this free report from The Motley Fool. Get instant access to the report -- it's free.
At the time this article was published Fool contributor Tamara Rutter owns shares of Apple. Follow her on Twitter, where she uses the handle @TamaraRutter, for more Foolish insights and investing advice. The Motley Fool owns shares of Google, Apple, and Microsoft. Motley Fool newsletter services have recommended buying shares of Apple, Microsoft, Google, and Nokia and creating bull call spread positions in Microsoft and Apple. The Motley Fool has a disclosure policy. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.
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