Lumia sellout no proof of Nokia turnaround

Updated 20 December 2012
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Lumia sellout no proof of Nokia turnaround

HELSINKI: It’s too soon to bet that Nokia’s on the road to recovery after its new Lumia smartphones were sold out in many stores across Europe and America, as retailers say supplies have been short ever since their launch.
The Lumia 920 and 820, which use Microsoft’s latest Windows Phone 8 software, were launched recently with expectations of a “make or break” for Nokia, once the undisputed leader in mobile phones, now losing share in smartphones and lower-end handsets.
Positive online reviews and anecdotes of waiting lists for the 920, as well as Nokia’s sales deal with China Mobile announced earlier this month, have helped Nokia shares rise over 40 percent in the past month.
But analysts say there’s no proof that Lumia phones are making significant inroads on market leaders Samsung and Apple or that Chief Executive Stephen Elop’s risky strategy of betting the company’s future on Windows software was paying off.
“I think people are looking and saying, ‘Hey, there aren’t enough 920s in the market’, but the reality is that the volume is so small. It’s not going to move the needle,” said Pacific Crest Securities analyst James Faucette.
Most analysts forecast Nokia will sell around 5 to 6 million Windows Phone devices in the fourth quarter, with over half of them older versions of Lumia, which have been heavily discounted.
That would be better than the 3 million Lumia smartphones sold in the third quarter, but it pales in comparison with Samsung, which champions Google’s Android system and is expected to ship 60 million smartphones in October-December.
Supplies of the new Lumia models appeared to be trickling back into US stores this week after being unavailable at many stores since their November launch.
Best Buy’s website showed 920s in stock, and Amazon listed them as the No. 2 best-selling AT&T phone on Tuesday, though they were still sold out in many European markets including Nokia’s home base, Finland.
The company’s flagship store in downtown Helsinki said there would be a wait of a few days for the Lumia 920. Finnish telecoms company DNA said “many hundreds” of customers were still on its waiting list and that the backlog was unlikely to be cleared before Christmas.
“The situation is that we still don’t have the 920s,” said DNA retail executive Sami Aavikko, saying consumer interest in Lumia had improved with the newest models while declining to give sales figures.
Some sources said one problem has been a shortage of Qualcomm chips. Qualcomm CEO Paul Jacobs said in November it would be “exiting the calendar year with supply and demand more evenly matched,” and a spokeswoman declined to comment further.
Elop told Finland’s public broadcaster YLE on Tuesday there was “very positive activity underway” with Lumia sales. Nokia has declined to comment on sales data or confirm any component shortages, and a spokesman said it was “working very hard to get devices into the hands of consumers as quickly as possible.”
Given low supplies, however, analysts said it was hard to gauge the real level of demand for the new Lumia phones.
Some industry executives and analysts have said consumer recognition for Windows Phones has improved thanks to spending on billboards and other advertisements over the past month.
“Are they lining up like they do for the iPhone? No. Are sales covering our costs, for instance marketing? Yes,” said Deutsche Telekom Germany’s marketing chief, Michael Hagspihl.
Many telecoms carriers as well as network equipment executives are hoping the Lumia succeeds, to prevent Samsung and Apple from gaining too much power.
Nordea analyst Sami Sarkamies was one of the more optimistic analysts, saying investors should focus on the improvement, albeit from a low base.
“My take is that there we have a seen a pretty substantial development since last year,” he said. “Previously there hadn’t been that market pull.”
With Nokia burning through cash and having already sold off assets such as its head office, muddling along with modest sales is not an option. Some investors have said they want to see quarterly Lumia sales of around 10 million.
Many believe Nokia will need to change its strategy — and its leader — if there is no clear improvement in Lumia sales in the coming quarters.
The company has not set any targets, but Elop said in February 2011 that the company’s transition would take two years, which leaves precious little time.
“I think they have more hard decisions ahead of them; not only what they do from a leadership perspective and strategic perspective, but also with whom they align themselves,” said Faucette at Pacific Crest.
Speculation of a buyout by Microsoft have periodically lifted Nokia shares, but with so much uncertainty over future sales, few analysts recommend pricing in any potential buyout premium.
The market’s average price target was around 2.30 euros, according to Thomson Reuters StarMine. The shares were up 8.1 percent at 3.21 euros late on Tuesday afternoon, breaking the 3 euro barrier for the first time since April.


UAE sovereign wealth fund Mubadala pays $271m for stake in Gazprom oil subsidiary

Updated 5 min 51 sec ago
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UAE sovereign wealth fund Mubadala pays $271m for stake in Gazprom oil subsidiary

  • Abu Dhabi’s state-owned Mubadala Investment Company (MIC) has agreed to pay $271 million for a 44 percent stake
  • Move underpins a strengthening alliance between Moscow and Opec’s Middle East countries

LONDON: Abu Dhabi’s state-owned Mubadala Investment Company (MIC) has agreed to pay $271 million for a 44 percent stake in an oil subsidiary of Russian gas giant Gazprom. 

The move underpins a strengthening alliance between Moscow and Opec’s Middle East countries, which joined forces to agree a supply-cut deal 18 months ago to stabilize the oil market after the price crashed in late 2014.

“This cements the link between GCC countries and Russia,” Giorgos Beleris, a Dubai-based oil analyst for Thomson Reuters, told Arab News.

Richard Mallinson, co-founder of London research consultancy Energy Aspects and a research associate with the Oxford Institute of Energy Studies, told Arab News that the GCC, and particularly the Saudis, had been talking “about aligning their goals in discussions about whether to extend a cap on crude production beyond 2018.” 

“They are after long-term cooperation, not just a short deal,” Mallinson said.

Shakil Begg, head of oil research for Thomson Reuters in London, said that joint ventures between Russian and Middle Eastern energy companies had become more common.

He added that Russia was still affected by certain sanctions, “so for them, it’s about getting access to technology and expertise.”

“Additional Gazprom production that could come on line is in difficult areas, such as the Arctic,” he said.

A joint statement about the deal from the UAE and Gazprom underlined Begg’s point. 

“For the first time, one of the largest investment funds in the UAE has invested in the Russian assets of Gazprom Neft, based in Western Siberia. The task of beginning cost-effective development of Paleozoic stocks can be more effectively solved within the framework of partnership, combining technological and financial resources,” the statement said.

Importantly, the two companies can make use of each other’s customer base in the Far East where demand, especially from China and India, has been strong.

MP said on its website: “(Our) major projects include exploration, development and production activities in Thailand, Indonesia, Malaysia and Vietnam, where we operate the majority of our assets.

“Southeast Asia continues to be the core region of our operated activities where we have developed an excellent track record of safe and efficient operations,” it added.

In 2017, MP’s average working interest production was about 320,000 barrels per day of oil equivalent.

Begg said: “It appears like this deal is strategic to obtaining a greater share of the light crude market in the Far East.

“The deal involves crude production from several fields operated by Gazprom Neft which feed the ESPO pipeline that supply a number of Chinese refineries and a few in Japan. Given the quality of Russian ESPO is similar to the main crude onshore crudes produced by the UAE (also sold to consumers in the Far East), it is possible that Mubadala are trying to retain/increase its market share in Asia.”

The growing Russian/GCC alliance was underlined recently when Russian energy minister Alexander Novak said a joint organization for cooperation between OPEC and non-OPEC countries may be set up once the current deal on oil output curbs expires at the end of this year.

Saudi Crown Prince Mohammed bin Salman told Reuters in March that Saudi Arabia and Russia were working on a historic long-term pact, possibly 10 to 20 years long, that could extend controls over world crude supplies by major exporters.

Announced at the St. Petersburg Economic Forum, the Russia/UAE agreement is between Gazprom, the Russian Direct Investment Fund RDIF) and MIC offshoot, Mubadala Petroleum (MP).

A statement by RDIF, the sovereign wealth fund of Russia, and MP said that it was creating a joint venture with Gazprom Neft to develop several oil fields in the Tomsk and Omsk regions.

RDIF and Mubadala Petroleum will acquire a 49 percent equity stake in Gazpromneft-Vostok, the operator of the fields. Mubadala Petroleum will hold 44 percent and RDIF 5 percent.

Kirill Dmitriev, CEO of the Russian Direct Investment Fund (RDIF), said: “(This deal) brings the experience and expertise of our Middle East partners to the Russian oil and gas sector. (We) see this as the first step in creating a consortium to pursue further significant investments in the sector.”

Dr. Bakheet Al Katheeri, CEO of Mubadala Petroleum, said: “Through this new partnership, we will not only share but also further build on our expertise and capabilities in oil and gas while adding significant oil production to our existing oil and gas portfolio.”

Gazpromneft-Vostok controls seven subsoil licenses in Tomsk and the neighboring Omsk region; these contain both mature and undeveloped oilfields. Its proven and probable reserves stand at 296 million boe (barrels of oil equivalent), of which more than 80 percent is crude oil. According to the Russian energy ministry, the company produced 1.64 million tons (33,000 bpd) of oil in 2017, down 3 percent year on year.

Gazprom is looking to divest stakes in non-core assets to pay for its capital-intensive projects in the Arctic, namely the East-Messoyakhinskoye, Novoportovskoye and Prirazlomnoye oilfields, according to a report by Edinburgh-based website NewsBase.com.

In February, the company reportedly sold the West-Noyabrskoye field in Yamalo-Nenets to an unnamed buyer, and it is also looking to unload stakes in the Neptune oilfield off the coast of Sakhalin and the Chonsky project in Eastern Siberia. Gazprom Neft reported free cash flow of 65 billion rubles ($1.15 billion) at the end of 2017, versus a negative value a year earlier, NewsBase said.