Nokia losing cash reserves at worrying pace

May 18, 2012
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Nokia may be trying to make a comeback in the smartphone world by pairing with Microsoft and leveraging Windows Phone, but analysts are concerned that the company may be burning through its cash reserves too fast. Last quarter the Finnish smartphone manufacturer reported a $1.7 billion loss, and analysts fear the company may not be able to stop hemorrhaging money.

Currently Nokia is said to have around €4.9 billion (~$6.2 billion) in cash reserves, with analysts predicting that the company will lose €2 billion (~$2.54 billion) over the next several quarters. At that rate, Nokia would be out of cash reserve by the end of the year. One analsyt believes even short-term debts could be affected: “In our opinion, the company's ability to repay even its shorter-term 2014 bond could be an issue.”

The company recognizes that cash flow is important, saying in a statement: “Nokia is implementing a decisive action plan to position our company for future growth and success. The main focus of these actions is on lowering the company's costs, improving cash flow and maintaining a strong financial position."

Nokia is hoping that its Windows Phone partnership will pay off in the United States. So far sales indciators have pointed at a mostly successful launch for the Lumia 900, although the response for the Lumia 800 in Europe has been somewhat tepid. The company was also recently knocked off the global phone sales spot by Samsung.

[via Reuters]


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