Nokia Corporation (ADR) (NOK): Is Elop’s Seat as Red as the Quarterly Numbers?

Nokia Corporation (ADR) (NYSE:NOK) investors, especially those like fund manager Jim Simons (see his full equity portfolio), have been waiting for CEO Stephen Elop’s prediction that the company would turn around in two years after he made the decision to drop the Symbian operating system in exchange for going all-in on Windows Phone by Microsoft Corporation (NASDAQ:MSFT). As the company is now passing that two-year mark, the rumbling that is heard emanatng from Espoo, Finland, is not the epicenter of an earthquake though Elop might be willing to fall into a hole in the Earth at this point.

No, that rumbling we are hearing is the growing impatience of investors, as Nokia Corporation (ADR) (NYSE:NOK) posted another very red quarter Thursday morning when it revealed its June quarterly earning report. So now the question might be, is the red color on that balance sheet symbolic of the hotness of the seat in which Elop is sitting? Might Nokia even survive as an independent company, or will this ratchet up the acquisition talk that has swirled around this company at various times?

As has been a pretty regular occurrence for the company, Nokia Corporation (ADR) (NYSE:NOK) took a loss of roughly $150 million for the quarter, through that was a smaller deficit than in past recent quarters.

And the loss was minimized depsite a significant drop in overall sales of smartphones and feature phones. The two bright spots for the company were its Nokia Siemens Networks division posting a profit for the fifth consecutive quarter, and the Windows Phone-based flagship Lumia line of handsets posted a significant growth numbers in the latest quarter, up nearly one-third from the previous quarter to about 7.4 million, though that was below the 8 million estimated by analysts.

Gross margins for the company dropped to 24.4 percent from 25.1 percent in the previous quarter, and that is partly due to the popularity of the entry-level Lumia 520 handset, which seems to have boosted Lumia sales overall but is a relatively low-margin device.

So on the one hand, it seems that Nokia Corporation (ADR) (NYSE:NOK) is having some successs with the Windows Phone OS and its Lumia devices, but clearly the feature-phone and smartphone markets have taken a hit on sales as evidence not just by Nokia itself, but also some negative numbers posted by Research In Motion Ltd (NASDAQ:BBRY) and HTC in their most recent reports. Where does that leave Nokia?

While the red numbers don’t seem to be isolated strictly to Nokia Corporation (ADR) (NYSE:NOK), the fact that the company is continuing to hemorrhage money does cause pause. The growth of Lumia is encouraging, and a consensus of analysts believe that the full takeover of Nokia Siemens Networks (see our coverage here) will help the company long-term because of that division’s history of profitability, it is a matter of what Nokia can and will do to turn the tide of red on its balance sheet. Do you have suggestions on how Nokia could turn its fortunes? Are you also bearish on this stock in the wake of the report missing expectations, or do you see a glass-half-full opening? Let us know your thoughts in the comments section below.

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