surprise announcement of massive new spending cuts and 10,000 more layoffs had observers cautioning the beleaguered mobile phone giant is at a crossroads that will determine if it sinks or swims.
Nokia, which only recently lost the world number one ranking it had held for 14 years, dramatically changed its strategy a year and a half ago when the then new chief executive, Stephen Elop, warned it was "standing on a burning platform" and needed to immediately shift course.
But after the company on Thursday suddenly said new big spending cuts and another 10,000 job cuts would be needed on top of the some 12,000 layoffs already announced since the shift, some observers said the company appeared to be slowly committing suicide.
"Nokia jumped from a burning oil platform and sank like a stone," the STT news agency said, summing up Thursday's announcement.
The Finnish company's new strategy involved phasing out its Symbian smartphones in favour of a partnership with Microsoft (NasdaqGS: MSFT - news) .
That alliance has produced a first line of Lumia smartphones, which Nokia is counting on to help it survive in a rapidly changing landscape marked by stiff competition from RiM's Blackberry, Apple (NasdaqGS: AAPL - news) 's iPhone and handsets running Google (NasdaqGS: GOOG - news) 's Android platform.
"I believe it was the wrong strategy from the beginning," Andalys Oy analyst Ari Hakkarainen told AFP, stressing though that now that Nokia had shifted course it was too late to turn the tanker around.
"They have chosen this strategy and they have invested everything that Nokia has in the new strategy. Basically, they must succeed or die," he said.
"They are at a crossroads," agreed Pohjola Bank analyst Hannu Rauhala, adding that it was hard to predict Nokia's future since "the visibility of the business is very poor."
The company, which in 2008 enjoyed more than 40 percent of the global mobile phone market, was already struggling to maintain its leading position when it entered the Microsoft partnership.
Since that deal it has been bumped by Samsung as king on the hill and reportedly has just around 20 percent market share.
"Nokia took a calculated risk and they knew that (the shift) would be very painful and that Nokia would lose market share in the short term, but in the long term of course, they have the reasoning that Nokia will bounce back," Hakkarainen said.
The company's announcement Thursday that it would implement an additional 1.6 billion euros ($2.0 billion) in cost cuts by the end of 2013, shutting down factories in Germany, Canada and Finland and letting go 10,000 more employees was meanwhile taken as a bad sign by many.
"Perhaps they should have enacted these reforms earlier.
Investors who are looking for long-term profit are not convinced that Nokia is a company that can deliver in the future," Dividend House analyst Arje Rimon told AFP.
Nokia's stock price plunged by as much as 16 percent Thursday and on Friday, ratings agency Moody's downgraded the company's long-term credit rating to junk status, following in the footsteps of Fitch and Standard and Poor's.
"Today's rating action reflects our view that Nokia's far-reaching restructuring plan ... delineates a scale of earnings pressure and cash consumption that is larger than we had previously assumed," Moody's said, adding though that it thought the restructuring was "positive and necessary."
