Canadian, Stephen Elop and ex-Microsoft executive, became the new CEO of Nokia Corporation in September 2010 September 21, 2010, taking over from Finn, Olli-Pekka Kallasvuo.
On 11 Febuary 2011, Nokia entered a strategic alliance with Microsoft, and announced it would replace its phone operating systems Symbian and Meego with Windows 7 for its smart phone devices. Bing, Microsoft's search engine will the search engine for all Nokia products. Nokia's shares fell 14% ($1.5) on Friday, to $9.36 on the NYSE, having declined two-thirds in the last 3 years.
The rationale for the deal appears to make sense given Nokia's weakening position in high end mobile or smart phones partly driven by the inadequate Symbian operating system. However many have questioned whether two under performing companies in the mobile market can come together to make a success of it. Analysts have questioned why Nokia has made this deal to pay royalties to Microsoft to use Windows 7 Phone when they could have incorporated Android for free from Google. Its seems unlikely that Nokia/Microsoft can really take on the might of the Android and Apple products and hence the sharp drop in the share price. In addition to these changes, changes to executive management and a general restructuring were announced which underscores how this once dominant company has fallen on hard times.
The transition to the new system will occur in 2013 and Credit Suisse thinks Nokia’s smartphone market share could fall from almost 30 per cent to 15-odd per cent during the next year alone, which would reduce earnings from €0.50 per share in 2010 to more like €0.40 in 2011, or a forward price/earnings of 18. With the lack of visibility and poor outlook, the shares could fall even further.
Networking and IT infrastructure company and a Dow component, Cisco Systems , fell from over $22 to finish the week at $18.70, a fall of 15% following its latest earnings report.
Networking and IT infrastructure company and a Dow component, Cisco Systems , fell from over $22 to finish the week at $18.70, a fall of 15% following its latest earnings report.
Margins were hit again this quarter and the forward guidance was uninspiring. The company losing market share in two significant product categories, switching, with sales down for three consecutive quarters and routers sales declining 8.9% quarter-over-quarter.
The forward price/earnings is around 10 which isn't expensive and though this monster of a company has a $104 billion market capitalisation, it has $30 billion of cash. Many are saying that Cisco's best days are behind it and it has become too big following its large acquisitions over the last few years.
Clearly the CEO's of Nokia and Cisco are going to have some sleepless nights and the competition isn't going to get any easier. Adapt, or die!
The forward price/earnings is around 10 which isn't expensive and though this monster of a company has a $104 billion market capitalisation, it has $30 billion of cash. Many are saying that Cisco's best days are behind it and it has become too big following its large acquisitions over the last few years.
Clearly the CEO's of Nokia and Cisco are going to have some sleepless nights and the competition isn't going to get any easier. Adapt, or die!
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