Unfortunately, Lumia's shine was not enough to stop the bleeding in Nokia's smartphone business, which fell again this quarter by almost 50%. Also, I'm beginning to wonder if Nokia's partnership with Microsoft ( MSFT) is now a Trojan horse.

At the onset of their agreement, Microsoft was seen as a potential catalyst for Nokia. This relationship can still very well be what both companies envisioned. However, given the weak adoption of Microsoft's mobile operating system efforts, it's worth speculating if Nokia couldn't do better by itself. Where's the evidence Nokia's market position is any better since these two came together?

I have no doubt that Microsoft has plenty of motivation to make this relationship work. But from a practical point of view, investors should be wondering if their fortunes would change if Nokia had the latitude to pursue other operating systems including Google's ( GOOG) Android. Not only would Nokia enter the conversation as a "true" Apple rival, but the company can begin to seize the same platform advantages as Samsung.

Along similar lines, I do question why management hasn't placed an emphasis providing cheaper phones, which is what has worked so well for Samsung against Apple. If Nokia truly cares about restoring its long-term health, capitalizing on the potential growth in emerging markets is a strategy that management shouldn't ignore, especially with mobile phone units down 21% this quarter.

As much credit as management deserves for the bottom-line improvements, the top line is where it matters the most, at least in this sector. Given Nokia's poor margin leverage and weakening market position, there are still plenty of fundamental challenges that still remain.

In the meantime, Nokia investors have to wonder how long the company can survive given the rate at which its global market share is eroding. While the company's cash flow is certainly improving with increased cost-cutting, I still see no compelling reason to hold this stock beyond a hope and a prayer.

At the time of publication the author had a position in AAPL.

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