Nokia Shareholders Express Growing Impatience with Turnaround Efforts

Nokia Shareholders Express Growing Impatience with Turnaround Efforts

Nokia CEO is running out of time

In early 2011, Nokia CEO Stephen Elop asked exasperated shareholders and fans of the company’s products to give him two years to turn around the company’s fading smartphone market share and financial fortitude. But with those two years expired, the firm has little in the way of positive news to report. And shareholders are getting increasingly edgy.

According to a Reuters report, Nokia shareholders got heated with executives of the firm in this week’s annual general meeting in Helsinki, Finland.

Related: "A Jump in Lumia Sales Is the Sole Good News in Nokia Earnings"

“Are you aware that results are what matter?” one shareholder asked Mr. Elop and the executive team. “The road to hell is paved with good intentions. Please switch to another road.” Another shareholder asked why Samsung has achieved financial results that are “10 times better” than those of Nokia.

Elop defended his decision to partner with Microsoft on Windows Phone instead of becoming yet another Android licensee, insisting that this was the right choice for the company.

“We make adjustments as we go,” he told shareholders. “But it’s very clear to us that in today’s war of ecosystems, we’ve made a very clear decision to focus on Windows Phone with our Lumia product line. And it is with that that we will compete with competitors like Samsung and Android.”

Certainly, Elop has made adjustments. Nokia’s original plan was to aim its Windows Phone handsets at the high end of the market, taking on expensive devices like Apple’s iPhone and the Samsung Galaxy S3. But that strategy hasn’t worked, and today Windows Phone commands just 5 percent of the worldwide market for smartphones, with Nokia in control of a portion of that. By comparison, the two biggest smartphone handset makers, Samsung and Apple, together control roughly 60 percent of this market.

So the strategy has changed to improve market share. In 2012 and early 2013, Nokia began filling out its Lumia lineup to include a wider range of low-end and mid-level models. This quarter, the firm is launching its cheapest Lumia ever, a $150 phone called the Lumia 520 (along with various regional variants) that sells without a contract and yet offers far better performance and functionality than the low-end devices it competes with. And sure enough, the Lumia 520 has already proven a big success, according to recent Windows Phone usage stats.

Many take umbrage with the fact that Elop doesn’t seem to have a Plan B. His firm sells various high-end feature phones, such as those in the Asha line, but it reserves its smartphone offerings for Lumia and Windows Phone. Many analysts feel that Nokia should offer a separate and complementary line of Android-based phones as well.

Elop—a former Microsoft executive—claims not to be interested in such an approach. And while he can point to ongoing cost-cutting measures and steady if small quarter-on-quarter Lumia sales improvements, shareholders will continue to grumble while the company loses market share and money. Nokia has lost a combined $5 billion since Mr. Elop joined Nokia in late 2010, and although the issues that dog the company were certainly caused by the previous executive staff, the current situation, increasingly, is one of his making.

“We’re not out of the woods yet,” Elop admitted.

Related: "Surprise! Nokia's Smartphone Business Rebounds in Q4 2012"

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