Nokia (NOK) got caught napping.Like a sporting goods store peddling hockey sticks in the thick of T-ball season, the Finnish wireless giant paid the price Tuesday for a winter of pushing the wrong buttons with consumers. As it turns out, what cell-phone users were demanding was the folding photo phone being churned out in quantity by outfits like Samsung and Motorola ( MOT). But Nokia didn't have any of these so-called midprice color-screen models, as first-quarter numbers will amply demonstrate. The strategic shortfall cost the world's largest handset maker more than 2 percentage points of market share, along with a 2% sales decline. The sharp miss shocked investors, who had been all set for a 5% sales rise on the heels of Nokia's
Delays in new model cell-phones can prove costly in the increasingly competitive handset market, as Motorola fans learned all too well last year. Motorola was late to market with some key camera-phone models and ended up ceding many of those sales to rivals. The screw-ups hampered Motorola's profitability and eventually helped force the departure of former CEO Chris Galvin. That said, Nokia isn't quite in the same predicament that Motorola found itself in last year. Nokia has a history of dropping behind on new designs in some quarters and even losing a little market share. But the company has always come roaring back, says a hedge fund manager who was short Nokia but considering a long position after the selloff. Meanwhile, the industrywide picture remains rosy. Globally, cell-phone demand is at record levels as emerging markets begin to take off and customers in existing markets make handset upgrades.