Nokia Recovers as BlackBerry Falls

So far this year, BlackBerry’s shares are off 20%, while Nokia’s are 5% higher.

BlackBerry has been unable to show any sort of turnaround. Its new flagship BlackBerry 10 has not been a success. Although BlackBerry’s sales increased marginally in the most recent quarter, compared to the one just before it, to $3.1 billion, gross margins fell to 33.9% from 40.1%. BlackBerry’s net loss for the most recent quarter was $84 million. And BlackBerry management knows so little about its future that it did not provide solid guidance for the balance of the year.

In Nokia’s most recent quarter, revenue dropped 3%, compared to the immediately prior quarter, settling at 5.7 billion euros. Operating profit was a very modest 328 million euros.

Nokia has a line of cheap handsets, mostly aimed at the developing world. These cellphones are profitable. They are something — perhaps the only thing — for Nokia to lean on as it tries desperately to break into the smartphone industry. According to CNNMoney:

To be sure, the Nokia 105 is as basic as cell phones get. It can’t surf the web, it has no app store, and it doesn’t even have a camera. But $20 for a phone that can make calls, send text messages and features a color screen is an incredibly good deal.

What’s more incredible is that the Finland-based company profits $5.80 from the sale of each phone, almost a 30% margin, according to an IHS analysis. Materials and manufacturing costs the company just $14.20 per device.

BlackBerry has no such product. (Neither does Apple.)

Nokia has held on to part of its roots — the ability to create a downscale cellphone. For the time being, it is the company’s salvation, whether or not its management wants to brag about it.