“Nokia just blew Q1 earnings in part because sales of its new iPhone-killer, the Lumia, have been “mixed.” (Read our Lumia review here.)
That’s bad.
But here’s what’s worse.
The company is burning cash at a mind-boggling rate, and it’s about to run into a cash crunch.
Nokia still has €4.9 billion of “net cash” on its balance sheet (cash less debt) and €9.8 billion of total cash. That’s a lot. But in the past year, Nokia has gone from comfortably making money to losing a lot of it.
In the past year, Nokia has burned €1.5 billion. In the past quarter, it burned a staggering €700 million. At the first quarter’s burn rate, Nokia would blow through its net cash in 7 quarters (less than two years) and its total cash in four years.
The cash situation has gotten dire enough that Nokia CEO Stephen Elop is already talking about the need to conserve it. When a company that knows it needs to be super-aggressive to have any chance of saving itself starts talking about the need to conserve cash, you know there’s a problem…”
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