Societe Generale, SEB Enskilda Upgrade Nokia to Hold

Handset manufacturer Nokia

was upgraded from Sell to Hold on Friday by both

and

.

reported Thursday that Nokia's sales have fallen 19 percent in the second quarter, with the company reporting a loss of 38 cents per share against a year-ago loss of 12 cents per share. Societe Generale was quick to point out that Nokia is failing dramatically in the Smart Device division, with the operating margins dropping 33 percent. However, it did mention that most of that fall was due to an inventory write-down of $268.4 million. "We believe that a successful portfolio must be based on a good high-end “hero” product, and Nokia will not have this until the Windows Phone 8 launch. The cash position is also a worry. Excluding NSN, Nokia burnt through almost €800m in the quarter, of which €740 was the dividend payment. However, this was flattered by €400m received as a prepayment from existing IPR licenses." It is fascinating that Societe Generale is so concerned with Nokia's failure in the smart devices area, especially following yesterday's

from Nokia's former chief designer that the company had a prototype for an iPhone-type device seven years before Apple

released the first version. "I was heartbroken when Apple got the jump on this concept," says Frank Nuovo, Nokia's former Chief Designer. "When people say the iPhone as a concept, a piece of hardware, is unique, that upsets me." SEB Enskilda said something similar in its report, stating "We do not see a positive investment case in Nokia until D&S shows top-line growth driven by a smartphone turnaround… Nokia is being squeezed from both ends of the market; it has been unable to capitalise on the migration from feature phones to cheap smartphones or on the highest-value market segments – very high-end devices." On Friday afternoon, Nokia traded at about $1.70, down roughly 8.7 percent.