Daily: The Nokia story gets worse by the day
Daily commentary
Nokia is finished in my view. It was clear before they switched to the Windows Mobile platform that their existing platform was not going to survive the onslaught from smart phones with Apple iOS and Android operating systems. However, the switch to Windows Mobile gives them some hope of salvaging the company as a handset manufacturer.
The latest news out of Nokia is that they are to fire 10,000 staff by the end of 2013 and the stock has been hit hard on the news. The latest results from Nokia have been horrible with losses for each of the last five quarters I believe. The company has now been cut to junk. What next?
I think network effects in the mobile space revolve around platform Apps and each platform’s cloud computing stickiness. Put simply, there are really few switching costs in the mobile space except sunk costs from App purchases and platform inertia. This is not Windows vs. Mac where your data simply could not port or you simply could not link in to existing networks. Today, data has become a lot more platform independent. You would think this favours Nokia’s eventual success given it’s existing sales channels. But I don’t think there is room for any more than two platforms given the weak network effects that do exist.
For me, that says RIM and Nokia are toast. At least Nokia can be bought out by Microsoft. RIM is flying solo and will crash and burn.
That’s it. Here are the links.
Link commentary
Most of the links are on Europe but there are a few other threads. I would highlight the following, especially with the foreign-language links.
Spanish banks are borrowing a record amount from the ECB, demonstrating that they have been shut out of the inter-bank market. The thinking behind the Spanish bank bailout was that giving them more capital would solve this problem. But the thinking was extremely short-sighted because it has put Spanish sovereign debt at risk. A German article below blames the German government for this blunder. Merkel blames the whole thing on an "irresponsible decade" in Spain in her most pointed display of moralism that I’ve seen.
- Spaanse banken lenen recordbedrag bij ECB – RTL Z
- Spanish Banks’ Net ECB Loans Jump to Record 288 Billion Euros – Bloomberg
- Euro-Krise: Deutschland ruiniert Spanien | Wirtschaft | ZEIT ONLINE
- Spain’s bond yield hits a record near 7 pct after Moody’s downgrade to near junk bond status – 6/14/2012 7:29:45 AM | Newser
- Merkel: La crisis en España es consecuencia de una "década irresponsable" – CincoDías.com
Another thread that I think is important is the one from De Standaard in Belgium telling us that US President Obama has been calling European leaders to voice concern at their dithering approach. He is clearly worried about the impact on the US and his electoral chances. Will his efforts matter in the end though? Van Rompuy belt met Obama over eurocrisis – De Standaard
India continues to be a concern. May inflation came in at 7.55% and that puts India in financial repression territory with China and most of the developed economies. Inflation adjusted rates in all the se places are negative. I still don’t see why the market monetarists think the fed is being ‘tight’. Governments around the world are being paid to borrow money. It makes no sense. India’s May inflation picks up ahead of expected rate cut | Reuters
Also note that Marc Faber is saying what I have said about the relative value of European equities. Obviously, if we get a disorderly situation, equities are going to take it on the chin even so. Why Marc Faber the "Gloom and Doom" Man Is BUYING European Stocks :: The Market Oracle :: Financial Markets Analysis & Forecasting Free Website
Nokia cuts 10,000 more jobs as losses deepen | Reuters
The economic programme of SYRIZA | Left.gr
Don’t worry about Target2 | Felix Salmon
La Argentina se afirma como el país más proteccionista – 14.06.2012 – lanacion.com
Sweden, where CEOs come cheap and still deliver | Reuters
BBC News – Income fall ‘biggest since 1981’, say tax experts
‘Friend of Greece’ François Hollande gives bailout ultimatum | World news | guardian.co.uk
El PP acusa a Almunia de «desleal» y pide su dimisión – ABC.es
"The End of the World as We Know It" by Dani Rodrik | Project Syndicate
Moody’s cuts Cyprus sovereign rating two notches to Ba3 | Reuters
Lance Armstrong’s Endgame: Doping in Pro Cycling, Tour de France | Bicycling Magazine
Lance Armstrong faces fresh doping charges from USADA – The Washington Post
Kirchner anuncia la construcción de 400.000 nuevas viviendas en Argentina | Economía | EL PAÍS
Is Anyone Answering the Phones at the ECB? – Tim Duy’s Fed Watch
Hollande’s finance minister says €450,000 pay cap ‘matter of justice’ | World news | guardian.co.uk
Le Figaro – Conjoncture : Grèce : Berlin serait prêt à assouplir le plan d’austérité
Inditex logra sus mejores resultados de los dos últimos años pese a la crisis | Economía | EL PAÍS
Roku CEO: Blu-ray will be finished in 4 years — Online Video News
Debt crisis: Bailed-out Spain pleads for aid from European Central Bank – Telegraph
Weltbank warnt vor globaler Finanzkrise – Finanzen & Börse – derStandard.at › Wirtschaft
Portugal é o país da União Europeia com maior quebra na produção – JN
they should have stuck to producing simple cell phone with the buttons, I don’t have a smart phone, I can’t stand them. I have a wonderful Nokia simple phone + a android tablet!
I think they saw the writing on the wall about normal phones. My mother for example told me she got a smart phone two weeks ago. The reason: It was so cheap. Where they probably bungled was in putting all their eggs in the smart phone basket. Now, its Windows 8 or bust and their future depends on Microsoft.