Shares of Nokia bounced back today after a steep sell- off yesterday on news that its orders to chip supplier ST-Ericsson were sluggish. “The revenues of Nokia have collapsed and this is why the revenues of ST Ericsson are not what we expected,” Carlo Bozotti, chief executive of ST Microelectronics told the Financial Times after ST-Ericsson announced its fourth quarter results. ST-Ericsson, a joint venture of ST Microelectronics and Ericsson, lost $231 million in its fourth quarter, 30% more than it lost in the same period last year, and 9% more than it lost last quarter.
Supplying chipsets for Nokia’s Lumia line of Windows-based phones could be a lifeline for struggling ST-Ericsson, but not yet. “It’s not the drowning victims trying to cling to each other for survival but almost,” analyst John Feland of Argus Insights told RCR Wireless News. He says that just as Nokia is currently losing out to Apple, Samsung and HTC in the smartphone market, ST-Ericsson is having a hard time competing with chip producers like Qualcomm and NVIDIA. Nokia chose ST-Ericsson’s NovaThor chipset for its Windows phones last year, building on an existing relationship between the two European companies. ST-Ericsson is the chip supplier for Nokia’s Symbian smartphones. Nokia said last year it will stop making new Symbian models and commit fully to the Microsoft Windows operating system.
Slipping sales of Symbian phones are reducing Nokia’s orders to ST-Ericsson, and so far orders for the NovaThor have not filled the gap. But the Lumia phones have only been available for a few months in Europe, and for an even shorter time in the United States. Feland of Argus Insights says that when Nokia announces its earnings on Thursday, Lumia sales will probably not figure prominently in the picture just yet. But Feland does not expect much patience from investors, predicting that Wall Street may “beat up” Nokia’s shares if Lumia sales do not impact its upcoming earnings announcement on Thursday.
