Is Nokia About to Mess Up?

Nokia (NYSE:NOK) attracted all the wrong kinds of attention on Thursday. Bloomberg is reporting that the company could stop paying dividends as it remains unprofitable and burns through cash reserves, while word out of Europe is that the flagship Lumia 920 is priced too high.

The Finnish phone maker recently teamed with with Microsoft (NASDAQ:MSFT) on the Lumia 920, a high-end smart phone running on the Windows 8 mobile platform. The device could be Nokia’s last serious push into the market as it burns through $300 million a month to fund its turnaround campaign. Apple (NASDAQ:AAPL) and Google (NASDAQ:GOOG) have all but driven the company out of the market with the iPhone series and Android OS.

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The company currently has about $12.5 billion in cash, and has seen a pretty sharp decline in year-over-year revenue growth. Until they reach profitability, “it would be rational for them not to pay dividends, to help maintain what cash they have,” said Mikael Anttila, who helps manage Nokia debt at SEB Bank.

According to Reuters, the Lumia 920 doesn’t seem to have a technological leg-up on any of its competitors, but it is still priced higher in Sweden and Italy than the Samsung Galaxy S3. The Lumia 920 could retail at as much as $868 before subsidies in Sweden, compared to $687 for the Galaxy S3. In Italy, Nokia could ask for as much as $770 for the Windows phone, while Samsung charges $681 for the S3, which has been on the market for months.

Besides the high price point, adoption of the Windows Phone 8 platform could be a roadblock for sales. Microsoft has had about as much success as Nokia in the mobile space, and users could be hesitant to try out a new, unproven platform. Ovum analyst Nick Dillon adds, “Windows Phone is still largely unknown to consumers — they would probably expect to pay less if they are taking a risk.”

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