A certain Finnish telecom giant is going the right way towards pulling off one of the most remarkable comebacks of all time, in the technology industry at least. Where other companies have failed to the point of no return, Nokia is showing signs of growth.
The company has started to gain market share with its Windows Phone powered Lumia smartphones, with a couple of Windows 8 and RT based tablets said to be in the pipeline.
But still, its growth is, up until now a slow one, leading to financials analysts lowering their credit rating on the company.
Moody’s rating for Nokia, at the moment, is at B1. And this is primarily based on concerns over the company’s cash flow. And as WMPowerUser notes, the financial firm also believes that Nokia may need longer than was originally expected to recover:
“The negative outlook on Nokia’s B1 reflects Moody’s view that it may take longer than 18-24 months for the company to return to sustainable profitability and cash flow generation.”
Recovering is a relative term, at the end of the day. But while Nokia has managed to reach strong double digit volume growth rates in terms of sales, it still lost €14 for every €100 ($19 for every $100) in sales during the second quarter of the year.
Nevertheless, Nokia claims that the outlook is bright. And it is advancing in the mobile market as planned. The telecommunication titan further states that profitability in this highly competitive segment is not far away.
Timo Ihamuotila, Nokia’s Executive Vice President and CFO said:
“We are pleased that the strong cash position we have maintained throughout our transition has enabled us to take advantage of an opportunity to acquire full ownership of NSN, whose financial performance has strengthened markedly in recent quarters.
In Devices & Services, we are pleased with the Lumia volume growth we delivered in the first half of this year and are looking forward to driving further share gains for the ecosystem. With these efforts our target is to return our Devices & Services business to sustainable cash generation as soon as possible.”
There is speculation, however, that the company could face negative implications if it tried to speed up profitability growth. Such a move would result in an increase in smartphone prices — ultimately making them less competitive in an increasingly competitive market.