Nokia reports its spring quarter on Thursday ? and the stakes are very high, indeed. The?substantial spring?revenue weakness from?BlackBerry and HTC implies that many second-tier brands are now in serious trouble with their brand new product launches. Samsung?s earnings miss was a shocker because the South Korean giant was supposed to have a wide open shot at dominating spring sales, particularly?because Apple?s iPhone sales started slowing down significantly in the March quarter. The industry is now staring at the possibility of the entire high-end smartphone market slowing down much faster than expected.?But Nokia is not dependent on high-end smartphones to the extent that BlackBerry and HTC are ? and that makes Nokia?s spring report absolutely riveting.
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Nokia has two black boxes in its June quarter performance: feature phone sales and the super cheap Lumia 520?smartphone sales. Estimating either?is fiendishly difficult.
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The company?s feature phone sales hinge on Africa, Middle East, Brazil and South-East Asia, and all leading brokerages have great trouble getting any sense of what is going on there. Wall Street underestimated Nokia?s low-end sales badly in Q2 2012 and Q3 2012, and then overestimated them grossly in Q1 2013. After Nokia?s feature phone shipments plunged to under 56?million units in the March quarter, it now has to deliver at least?54-55 million units to prevent a freak-out over how fast this business is eroding. This is a unique problem for Nokia; its major rivals have all pulled out of the feature phone market, fearful of its collapse.
Another mystery is the sales volume of the Lumia 520, which is the first true budget device in Nokia?s new Windows Phone 8 range. Its non-subsidized price dropped well under $200 during the June quarter, but there was a series of unusual sell-outs of this device in countries like India and America during April and May. Does Nokia have a big Windows Phone volume hit on its hands with the 520 ? and how does it impact the average sales price (ASP) of smartphones? If Nokia did?achieve a big Lumia 520 volume in the spring, its smartphone margin will probably give us strong clues about how profitably Nokia can sell such a cheap device.
Wall Street is all over the place. The revenue consensus ranges from?5.9 billion euros to 7 billion euros. The smartphone sales expectation is high; investors want volumes to vault from 6.1 million units in Q1 to 8 million units in Q2. But even here there is ambiguity about what would be??good? volume. If Nokia beats the smartphone volume consensus but delivers surprisingly low ASP and margins, that is going to be taken as an indication that the 520 is eroding the profitability of the division.
What Nokia really needs right now is a smartphone volume of 8.1 million or higher with sequential ASP decline from the March quarter that is 2.8% or lower. That is a delicate needle to thread.
This article was originally published on BGR.com
Source: http://news.yahoo.com/moment-truth-nokia-161555981.html
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With the IPO door seemingly shut to gaming companies, some of the biggest privately-held studios in the world have been looking for new ways to reward longstanding employees. San Francisco’s Kabam becomes yet another one today in a deal that let employees sell $38.5 million of their shares at a $700 million valuation. Everyone in the company who had vested shares had the choice to sell, so it wasn’t limited to just the management. Kabam isn’t saying who is funding this offering, except to say that both current investors as well as a few new investors are participating. Kabam’s most recently disclosed valuation before this offering was roughly $500 million in a May 2011 deal that involved Google Ventures, Intel Capital, Redpoint Ventures and Canaan Partners. But since Kabam has successfully transitioned onto mobile platforms and away from Facebook with three of the top 25 grossing iPhone titles in the U.S., it’s been able to bump that valuation up a little bit. The company now says it may make about $300 million this year in revenues, up from $180 million last year. While the company says it’s profitable, it’s still not clear how profitable it is. Kabam said it has more than $50 million in cash in the bank today. But the company also said it had $45 million in cash in the bank back in January, so a roughly $5 to 10 million increase in cash on the balance sheet over six months is not that much. CEO Kevin Chou has publicly talked about the company’s IPO prospects in the past. But after Zynga’s disastrous debut with a 75 percent decline in its first year, very few gaming companies seem willing to test the IPO waters. Even though The Wall Street Journal reported last month that King, the maker of Candy Crush Saga, had hired bankers to explore an IPO, sources close to the company have told me King has backed off this prospect for the time being. What that means is you have a host of companies that are throwing off cash that are tied in their ability to provide returns to early shareholders or reward employees. In this case, a secondary offering might make sense. Finland’s Supercell gave all of its employees the option to sell 16.7 percent of their stakes when they raised $130 million at a $770 million valuation earlier this year.