 Welcome to Newsdesk on SiliconANGLE TV for Thursday, October 18, 2012. I'm Kristen Folletti. Third-quarter earnings reports are rolling in. What are they revealing for Nokia and Verizon? Here to provide his breaking analysis on the rise and fall of earnings and to provide some valley perspective on color is SiliconANGLE founder John Furrier. Good morning, John. How are you? Nokia this morning published its financial results for the third quarter of 2012 hosting almost three-quarters of a billion dollar operating loss on nearly 10 billion in net sales. So what action does Nokia need to take to get out of this slump? I mean, I think Nokia is one of those stories that was such a huge company in terms of phone penetration over the years with mobile phones and had a huge dominance on a global basis. Have just been decimated by the smartphone business. So obviously, they're taking their lumps. They wrote the big famous manifesto last year around how everything's going off a cliff. What they really got to do, Nokia has recognized that they are where they are. They have some market share outside the U.S. in a big way. They still have a chunk of market position and they have to recognize that they are essentially at the back of the pack at this point and not try to win the number one spot right away. What they need to do is just stay with this growth in the market and understand that they'll still get more share and have a specific share growth plan. That's my analysis because the market is still growing with mobile. So they have a ton of opportunity left. It's not a total implosion at this point. Do you believe Nokia's backing of Microsoft's new Windows Phone 8 operating system, which doesn't launch until October 29th, is what stalled sales? Absolutely. And that's one factor. We talked about that yesterday about Intel and their earnings. Cosade has this effect. Everyone's kind of down on Microsoft, but it's such a big position in the market and any swing with Microsoft affects other players. That is clearly the case here, and Nokia certainly is hitching up with Microsoft and betting the ranch on that relationship. Do you think the new Lumia 920 and Lumia 820 will be able to reverse the smartphone slide in the fourth quarter? I think it has a good chance of at least creating a change in direction for the company in terms of up or down. I don't think it's a sink or swim. I think the sooner they get a good product out in the market, they'll just get a lift off the overall growth. So I do think that they will help them, and ultimately their execution will ultimately determine. Again, this market is growing, so if you can just get in with a product that's good enough and you price it properly, it will stay with the growth of the market. And again, pricing is critical because of the competition is so high for the first couple of players in the business, Microsoft. I mean Apple and Google, for example. So get in there with the product, price it effectively, and draft off the leaders. That's a good strategy. If it does that, it should do well. Mark Risen-Hupkins helped us dive into all the specific details yesterday regarding the rollout of Windows 8 on the Surface, Xbox, and the desktop. The Surface is part of the new world that Nokia is playing in with regard to Windows 8 mobile. But what does that mean for long-term partners of Microsoft like IBM, Dell, HP, and others? Well, I'm sure Mark did a great drill down. He's got that covered. What's Microsoft's working on? And he's been deep in Microsoft, as well as John Casoretto. My angle on this is a little bit different. I mean, I've worked with Microsoft for now 20-something years and going back to my relationship back with it, HP. Microsoft has always been basically based on relying on all their hardware partners. But with Apple and Google vertically integrating, and you've seen that even with Oracle and the Enterprise, Microsoft's basically trying to build their own tablet and hardware platform, which I think is just more of an R&D effort for them, but they have to end up going there. Purpose-built hardware is a big trend, but this is a direct conflict with Microsoft's core business strategy. And again, they do zillions of dollars with these guys. So HP, IBM, Dell, all of the hardware manufacturers rely on the operating system of Microsoft. So the Surface is great. It's getting a lot of hype. It's cool, and some great conversations going around that. But deep in the ecosystem of their business model, it's a direct channel or product conflict for Microsoft. So I'm sure the folks at HP, IBM, and Dell are ringing up the phone saying, hey, what the hell are you doing? And we saw Google do this with the original Nexus phone. So it's not an uncommon practice, and I think it's a good balance for the vendors. So if Microsoft plays this properly, they can lead the pack and provide innovation as a lighthouse for the other ships to come into their harbor, which is HP, Dell, and Microsoft. So keeping them balanced and innovating on the hardware will certainly hopefully do that. If Microsoft decides to go fully integrated, then it's a direct threat, and then it'll have ripple effects throughout the industry. On the flip side, Verizon is reveling in their third quarter report. The wireless service provider has revealed their third consecutive quarter of double-digit growth. What can they attribute to their earning success? I think their earning success is directly related to the fact that they saw this coming big time. So if you go back five to six years, you'll see the transition as Wi-Fi was booming. All the carriers were investing heavily in CapEx investments, including AT&T at the time, which was a real crappy service. So AT&T and Verizon in particular invested billions of dollars in CapEx capital equipment for tower construction, tower placements, bandwidth, backhaul, all the plumbing to power the towers. And then what happened is obviously the growth of the iPhone and smartphone market comes in in 2007. That completely changes the market in terms of data and voice. And now with LTE, it's a huge lift for Verizon. So LTE, long-term evolution, which is the high speed, amazing speed, blows people away. Even the top geeks in Silicon Valley when they see it for the first time go, my God, look how fast this is. This is really powerful. This is going to power the data market that has been constraining their networks. And as long as they have the capacity, they're going to be differentiating on the quality of their speed. So Verizon really made their bones with this back in the day when the cell phone market was booming. They had great coverage and they had great reliability. So if they can move to that formula, which they have done with LTE, they will be a big winner. So let's turn to the Valley for a bit. Just about everybody seems to have an opinion on the mobile full photo sharing startup, Color. We talked briefly with Kristin Nicole earlier today. And they didn't, in fact, shut down the company, but are planning on selling to Apple. So what do you think was the source of this misinformation and confusion? Well, a couple things going on. So Color's the startup in Silicon Valley. Kristin talked about that had raised $41 million and then kind of been struggling. But there's two things going on. I'll take that in two parts. One is the ecosystem of Silicon Valley in general. There's also a Wall Street Journal article about Google Ventures and being so great. There's inherent conflict with the Valley right now. Right now in Silicon Valley, there just really isn't anyone that I'm seeing in the current cadre of investors, including the angel, super angel investors, that want to build a durable company. It seems to be quick flip artists going in here saying I'm going to put money in and sell it. Even the Wall Street Journal today acknowledged Google directly saying, yeah, the role of the VCs is to invest, find a company, grow it, and then sell it. That's not the way it should work. It should be invest in a company, go for the long term, build a durable business, build the next Apple or Google. So there's inherent dynamics going on in the entrepreneurial community, and that's driven a lot by a lot of factors. But so that's a big change going on right now. So there's disruption in the VC community around philosophy and also tactical investment decisions. Color was one of those investments where it really was a good opportunity. You had an experienced founder in Bill Nguyen. He worked at companies like Phone.com. I've met him a bunch of times. He is an experienced founder. He started companies. He's recruited teams. He's created liquidity. He's gone public. This guy is really good. Now he's eccentric and he's kind of wild and crazy, but that's a good in a good way, crazy. He raised a lot of money for a good opportunity with mobile file sharing. The big problem here was is that the press killed them. Sites like TechCrunch and these Venture Beat and these guys just absolutely destroyed them. And they should be ashamed of themselves for that because they were just completely hyping up these guys and then taking them down to drive pages. To me, that's the big problem here and that's negative journalism. You know the founders at Color and the culture of the Valley. What are the larger implications for tech startups? I think this is a great example of couple things. One is the ecosystem is changing. One around financing. And you got to really pick the selection of your parties. I was mentioning earlier the puff piece about Google Ventures is interesting. But the investment climate is old, old ways gone. I mean it was the article that was written. I forget who wrote it, but the old way of launching a company is over. Big splash in the pool and that's what Color did. Hire a big PR firm, jump in the pool, big splash. Everyone's happy, get some press releases and then move on and you've manipulated the press. That's not like that anymore with social media. So that's one thing that's changed. The other thing that's changed is companies need to control their own narrative. And I think with social media in particular, Twitter, Facebook, it's a company's obligation to basically be on the network daily working with people. It's like open up a storefront. So the actual dynamics of public relations have changed. And if companies do that successfully, they can actually turn that into a product advantage for them in sourcing information from the crowd. So with mobile computing and crowd sourcing, the dynamics of the startup execution of conception, financing, launching a product has completely changed. I mean literally just in the past five years this is complete transformation. Well, John, it looks like we're out of time for today but thanks so much for joining us and we'll talk with you again soon. Thanks. For in-depth coverage on News of the Day and the latest breaking analysis, join us daily at News Desk on SiliconANGLE TV.