Wednesday, May 13, 2009

Nokia halt investment

HELSINKI (Reuters) - Nokia, the world's biggest cell phone maker, said on Tuesday it would halt investment in its first major Internet service push, a media sharing site, as part of a revamp of its services strategy.

"Ovi Share ... is planned to be maintained in its current state," a spokesman for the company said, adding Nokia would keep the service up and running.

Nokia built the service -- seen as one of the cornerstones of its services strategy -- on the acquisition of U.S. firm Twango in 2007, and opened it to the public at the Mobile World Congress trade show in February 2008.

"It seems like an admission of failure -- which is healthy at this point," said GC Research analyst Tero Kuittinen.

Nokia has not unveiled usage numbers, but analysts say these have remained low due to draw of already established sharing sites such as Facebook or Yahoo Inc's Flickr.

"They definitely need to collaborate with Facebook instead of trying to replace it. Same thing with Twitter and Flickr," Kuittinen said.

To cope with slowing phone demand Nokia is building a new business from Internet services -- such as games or maps -- but said on April 28 it would scale back separate investment plans due to the slowdown, and focus on merging the delivery of services.

Nokia, which reported its first-ever quarterly pretax loss for January-March, due to sinking phone demand, is in the middle of a big cost-cutting program, having shed 3,500 jobs so far.

Shares in Nokia closed 2.8 percent lower at 10.28 euros in Helsinki, compared with 0.9 percent weaker DJ Stoxx European technology index.

(Editing by Will Waterman)

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