How Low Can Nokia Go?

Analyst price targets on Nokia (NYS: NOK) are getting surreal.

Jefferies analyst Lee Simpson became the latest Wall Street pro to take the limbo stick lower, slashing his target by more than half to $1.46. Since that price tag is lower than where the stock is now -- though not by much -- he's also hosing down his rating on stock from Hold to Underperform.

Simpson's concerns aren't all that different from others who have turned bearish on the Finland-based company that just a few years ago was the world's undisputed top dog in mobile handsets. The alliance with Microsoft (NAS: MSFT) to champion Windows' mobile operating system has been disastrous.

The market isn't warming up to the product. Lumia 900 -- the flagship Windows Phone 7 smarpthone that was supposed to put both Nokia and Microsoft back on the map -- just saw its retail price cut in half by its exclusive carrier AT&T (NYS: T) . Despite all of the "Whoa -- Megan Landry alert" commercials, the handset that's only been on the market for just three months can now be had for less than $50.

Microsoft has truly sucker-punched Nokia. Between the decision to make its own Surface tablets and the fact that the upcoming Windows Phone 8 platform won't be compatible with the devices on the market today, Nokia signed its own death warrant when it hooked up with Mr. Softy last year.

Simpson thinks the current quarter will be a tough one for handset makers in general, but the 15% to 20% decline in component orders that he's seeing out of both Nokia and Research In Motion (NAS: RIMM) is leading -- or should we say bleeding? -- the way.

He's obviously not alone.

Bernstein analyst Pierre Ferragu slashed his near-term target on the shares to $1.56 late last week. He also widened his deficit forecasts for both fiscal 2012 and 2013. Both analysts see quarterly losses continuing for some time, and that's pretty shocking when one recalls when CEO Stephen Elop bragged about the partnership with Microsoft last year as a deal that would find the software giant paying "billions" to Nokia for its support.

The problem for Nokia is that the catalysts aren't there. Just as no one has been interested in snapping up RIM on the way down, there doesn't seem to be a market for the fading handset maker. Losses will continue. Market share will continue to erode.

The only thing at this point that may stop the bleeding is replacing Elop at the top, but nabbing a respected outsider won't be easy given the near-term challenges that await Nokia.

The surreal shrinking scene will continue.

Knocking Nokia
There's no denying that the next trillion-dollar revolution will be in mobile (and that's not just lip service; it's the name of a free special report that you can check out now). However, no one seems to be inviting Nokia to the revolution.

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