Nokia Cuts Lumia 900 U.S. Price in Half

Date : 07/15/2012 @ 7:00PM
Source : Dow Jones News
Stock : Microsoft Corp. (MM) (MSFT)
Quote : 67.92  0.39 (0.58%) @ 8:00PM

Nokia Cuts Lumia 900 U.S. Price in Half

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The price of Nokia Corp.'s (NOK, NOK1V.HE) flagship Lumia 900 Windows phone has been cut in half in the critical U.S. market, a little more than three months after the launch of the smartphone at AT&T Inc. (T) stores.

The Lumia 900 hit the market at AT&T stores in April and the device had been priced at $99 with a two-year agreement, but a new price of $49.99 was introduced early Sunday morning.

The price cut comes as Nokia's smartphone performance is under significant scrutiny given the financial woes it has encountered due to market share losses and pressure on margins. It reports second-quarter earnings Thursday following stinging financial losses in recent periods.

Nokia Chief Executive Stephen Elop last month announced further downsizing actions, including 10,000 job reductions and a streamlining of research and development efforts.

"This move is a normal strategy that is put in place during the lifecycle of most phones," Nokia spokesman Doug Dawson said in an email. It "allows a broader consumer base to buy this flagship device at a more accessible price."

Price reductions are not uncommon in the U.S. market, in which carriers like AT&T subsidize the cost of the phone as long as a customer signs a contract. The actual cost of the phone to AT&T is not public and it is unclear how both companies--Nokia and AT&T--will pay for the new price cut.

Mr. Dawson noted Samsung Electronics Co.'s (SSNHY, 005930.SE) Galaxy IIS at AT&T, which debuted about six months before the Nokia Lumia 900, was on the market for roughly the same period of time as the Lumia 900 before a $50 price drop was implemented.

Nokia's Lumia phone took a hit a few weeks ago when it became apparent that current versions wouldn't be eligible for an upgrade to Microsoft Corp.'s (MSFT) new Windows 8 software later this year. Nokia has said the Lumia phones will, however, get significant upgrades even if Windows 8 upgrades won't be available.

The move comes following a Lumia 900 launch that has been viewed by analysts as being lackluster. That has tarnished the high-profile relationship between Nokia and Microsoft, which teamed to launch a portfolio of Windows phones to better take on Apple Inc.'s (AAPL) iPhone software and Google Inc.'s (GOOG) Android system.

Nokia has weathered a punishing depreciation in share price even with the Lumia 900 on sale--the stock has fallen 64% since the April 8 launch of the smartphone. The decline partially reflects the uncertainty with which investors have viewed the Lumia lineup, which replaced other smartphones that were regarded as outdated.

Nokia's stock touched a 17-year low last week and ended trading Friday at 1.51 euros ($1.85). Its market capitalization of about EUR5.6 billion ($6.8 billion) represents a more than 95% decline from its peak days during the information technology boom in the year 2000.

The struggling handset maker's market cap is now lower than the $8.5 billion Microsoft Corp. paid for IP-telephony company Skype Ltd. last year. Nokia is valued at roughly half of Apple's latest quarterly net profit.

Write to John D. Stoll at John.Stoll@wsj.com





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