MKM Partners downgraded Nokia Corp. (NYSE: NOK) Wednesday morning after its research suggested that initial range of Lumia Windows phones from the vendor is "not a company saver."

MKM Partners analyst Michael Genovese writes in a report that the Nokia Lumia models were "typical hot phones" for a few weeks in retail stores but have now been supplanted by the latest Android models from High Tech Computer Corp. (HTC) (Taiwan: 2498) and Samsung Corp. :

The first thing we noticed in our late-May retail store checks is that the Lumia "hero" displays that were prominent in T-Mobile stores two months ago and AT&T stores one month ago are now largely gone. Store clerks overwhelmingly told us that they promote Samsung Galaxy and HTC One models, with many reporting that they use these phones themselves. The retail reps most often cited the large gap in available applications as the primary reason to choose Android over Windows.

Genovese finds that the devices did not ignite strong consumer interest in Windows phones in the U.S. or Europe. "We do not find that there has been a significant positive inflection in global Windows Phone demand, and we are skeptical that Windows 8 handsets and tablets, to be launched later in 2012, will make much of a difference," the analyst says.

Why this matters
Nokia is hanging its future development on making current and future Windows phones massive sellers worldwide. These further signs that the strategy is -- at the least -- taking time to take off is more bad news for the company. Indeed, MKM Partners now suggests that Nokia's key value is now in its IP portfolio, not its handset business. "Our new price target of $2 per share is based on our estimate of the value of the company's intellectual property, which we peg at slightly more than $7bn," analyst Genovese writes. "We assume no value for the handset business and no value for the roughly €4bn in net cash, which Nokia could potentially burn through in the next two years."

For more

• Euronews: Nokia Cash Burn Freaks Analysts
• Nokia Aims Low With New Devices
• Nokia: Will There Be A Comeback?
• Nokia: The Missing Hero
• Nokia: How Low Will It Go?
• Euronews: Nokia's Q1 Device Disaster

— Dan Jones, Site Editor, Light Reading Mobile