Investors pinning their hopes on a turnaround for Nokia (NYSE: NOK ) were hit with more bad news today. The world's largest mobile-phone maker issued a profit warning for the company's fiscal first quarter that sent shares tumbling to a 15-year low. However, a weaker sales outlook is just the tip of a very large iceberg.
The Finnish company recently launched its new Lumia 900 smartphone in the U.S., where it hoped it would be met by strong demand. The flagship device is a big step forward for Nokia, because it showcases a partnership with Microsoft (Nasdaq: MSFT ) , in which the tech companies together are attempting to win back some share of the smartphone market.
So much for a hassle-free phone
However, the Windows-based smartphone that was supposed to spur Nokia's turnaround has a problem with suddenly dropping high-speed data connections. That's particularly embarrassing for Nokia, because it spent months promoting the device with a marketing campaign called the "Smartphone Beta Test," in which it scoffed at glitches in Apple (Nasdaq: AAPL ) and Google (Nasdaq: GOOG ) phones.
Apple and Google currently dominate the mobile scene -- together commanding more than 80% of the U.S. smartphone market, according to comScore. That's in stark contrast to Microsoft's 4% share and Nokia's distant 1% claim on the industry. Complications with the new smartphone that was supposed to save Nokia could instead hurt the company if customers return the devices.
A bright side?
If anything positive came out of this setback, it was an opportunity for Nokia to showcase its impressive customer service. The company assured buyers that it would issue a fix for the problem on April 16. In the meantime, Nokia will try to buy consumers' forgiveness by offering a $100 refund to all customers before April 22, even if the bug didn't affect their device.
These are problems that simply can't happen if Nokia ever wants to make a meaningful comeback. For now, I've lost all confidence in the company's ability to regain market share. Instead of wishing for a turnaround at Nokia, find out what stocks are the three hidden winners of the smartphone revolution in this free report from The Motley Fool. Get instant access to the report -- it's free.