Nokia had more than 10 billion Euros in their piggy bank in 2007, the year that the iPhone came out. Today that figure stands at less than half that. What’s most troubling is that Nokia lost 2.1 billion Euros during the past five quarters alone. If this rate of erosion continues, then things could get ugly. According to analysts who have spoken to Reuters, Nokia is at risk of running out of money in just two years. On average, the analysts that were polled say that Nokia will burn through an additional 2 billion Euros over the next three quarters. Only the most cynical believe that Nokia will default on their debt, but then again even the most negative commentators have been wrong in predicting just how bad things would get for the Finnish handset maker.
So say everything goes to hell in a handbasket, what next? Right now Microsoft is giving Nokia $1 billion a year under the guise of “platform support” payments. That number could increase in a bid to help Nokia survive. But then how will Samsung, HTC, Sony, and the others feel about Windows Phone if they know that Microsoft is supporting one of their biggest competitors?
There’s also patents, which Nokia has a ton of, could they sell some for a couple of billion in order to stay in business? Everyone is hungry to build up their patent army, so why wouldn’t a company like Microsoft buy Nokia’s patents and then promise everyone who uses Windows Phone protection against litigation?
And finally there’s the possibility of Nokia splitting up. The smartphone division would stay in Nokia’s possession, while the dumbphone unit would be given to another player. The $8.1 billion Nokia spent buying NAVTEQ back in 2007, maybe they could see that for a couple of billion as well?
It’s going to be a bumpy ride folks.