Nokia rumoured to suspend dividend

Former rubber boot maker Nokia is expected to propose suspending its annual dividend payment for the first time in over 20 years.

According to Reuters, Nokia has paid an annual dividend every year since 1989. Its payment last year was 20 euro cents. Along with gloomy fourth-quarter results the move is likely to warn investors that any recovery at the company will be slow, if it ever happens.

Nokia returned to profitability after massive cost cuts and stronger sales of Lumia smartphones, helping its shares surge over 16 percent over the past 10 trading days.

But it warned that quarterly sales of devices and services fell 35 percent to $5.2 billion, and analysts estimate its net cash position fell to 3.4 billion from 5.6 billion a year earlier.

At the moment, analysts have been warning that the company has a long way to go before proving it could claw back market share – and it needs to start gaining fast.

Nokia said it sold 4.4 million Lumias in the fourth quarter, but analysts estimate Nokia’s market share in the high-margin smartphone business is still around five percent.

Either way it is starting to look like CEO Stephen Elop’s decision in February 2011 to adopt Microsoft Windows software is not working. At the time, Elop said that Nokia’s transition with the new software would take two years and time is nearly up.

What will be crucial to Nokia is that it has sustained growth in Lumia sales this year. The Lumia 820 and 920, which use the latest Windows Phone 8 software could make or break the company