NEW YORK ( TheStreet) - In an effort to stave off bankruptcy, Nokia ( NOK) is trying to maintain its foothold in the smartphone race, competing with the likes of Apple ( AAPL) and Google's ( GOOG) Android. The company hopes that its recent aggressive actions will allow it to compete and survive. If not, it risks fading away. The Finland-based phone maker has been floundering for months; shares have dropped more than 54% since early April. In attempt to "return the company to profitable growth," Nokia plans to shakeup senior leadership, cut 10,000 jobs by 2013, close 3 factories, improve Lumia, its smartphone, and sell Vertu, its luxury mobile phone business.
Despite these major restructuring plans, analysts (and investors, if the 11% post-announcement share plunge is anything to go by) are struggling to see how Nokia will fit into the mobile phone landscape. "Nokia made some bold decisions. Right or wrong, only history will judge," said John Jackson, Vice President of Research at CCS Insight in a recent interview. "They'll certainly have to continue to get smaller before they have a chance to get bigger." Nokia has lost more than 70 billion euros in market value since Apple introduced the iPhone in 2007, according to a Bloomberg report. In an attempt to compete with Apple's iOS and Google's Android operating system dominance, Nokia phased out its homegrown Symbian operating system and adopted Microsoft's ( MSFT) Windows Phone last year. The decision failed to give Nokia the competitive edge it was seeking - Nokia shipped more than 2 million Lumia smartphones using the Windows Phone operating system last quarter. Apple sold 35.1 million iPhones in its most recent quarter. As such, the smartphone market seems to remain a two-horse race. The mobile supply-side has completely transformed in recent years, according to Jackson. "The economics of the old line has been fundamentally undermined by platform companies with business models anchored in a cloud," such as Apple and Google, he said. "What is Nokia?" Jackson said. "Nokia has an alignment with Microsoft, but if this is now a platform game, where is Nokia's platform? Nokia is in this critical spot."
A major part of Nokia's new strategy is to "improve the competitiveness and profitability of its feature phone business," but Jackson emphasized that Stephen Elop, Nokia's president and CEO, needs to identify a vision beyond the Lumia product push. "Practically speaking, they need something to sustain morale. Nothing cures sapped morale like a few successes in the market and to show a strategy is bearing fruit," said Jackson. Rumors of takeover swirled last week as Nokia's stock plunged, but according to Jackson, there are not any obvious scenarios. "You're going to see a traditional marriage," he said. "One phone OEM
original equipment manufacturer won't scoop up another OEM." Lars Soederfjell, an analyst with Bank of Aaland in Stockholm, seems to agree as he told Bloomberg last week that Nokia needs to stabilize its business to attract suitors. "Would you buy into this, with these type of fundamentals?" Soederfjell said. "There's too much uncertainty." --Written by Nathalie Pierrepont in New York. >To submit a news tip, send an email to: firstname.lastname@example.org. Check out our new tech blog, Tech Trends. Follow TheStreet Tech on your wireless devices. >Contact by Email. Follow @nrpierrepont