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Nokia (NOK) Bounces Back on Strong Windows Phone 8 Lumia Sales

By: , dated January 4th, 2013

To many market watchers, it’s a miracle that Nokia (NOK: Charts, News) is still trading today. The company, which was once the undisputed leader of the mobile handset market, nearly hit $1 per share in July, before strongly bouncing back 130% to current levels on hopes that Microsoft’s (MSFT: Charts, News) Windows 8 Phones would restore its ailing Lumia line. Although some investors have profited from this recent rally, Nokia remains a shadow of its former self, with shares trading 90% lower than its all-time high near $40 per share five years ago. Now that the company has survived the impending 2012 doomsday that many analysts had forecast, does it have a chance to turn it all around in 2013? Daily Chart It’s easy to forget that despite its troubles, Nokia is still the world’s second largest handset maker after Samsung, with a 22.5% global market share. However, that number includes all mobile devices – both standard cell phones and smartphones. Today investors are focused more on smartphone sales, where Nokia trails in a distant seventh place with a 4.3% sliver of the market – a disappointing slide from third place in the previous quarter. Samsung, Apple, Sony, HTC and Research in Motion claimed the top five smartphone market spots, in that order, at the end of 2012. Surprisingly, Nokia’s new Lumia 920T also sold out within two hours of its debut in China, where it is supported by heavyweight carriers such as China Mobile. The 920 model and its variants are also selling well in Europe and the United States, emerging as an unlikely top seller on Amazon.com (AMZN: Charts, News) and its exclusive U.S. carrier AT&T (T: Charts, News). Nokia is expected to also gain support from Verizon (VZ: Charts, News), since offering Nokia phones as a viable alternative smartphone would help both Verizon and AT&T gain leverage against Apple and Samsung to negotiate better subsidy deals. Without Nokia’s presence, these two main players in the smartphone field have a firm upper hand against wireless carriers. Although Nokia has put all of its faith in Microsoft, which is expected to invest heavily into Windows Phone 8 throughout 2013, the commitment is not fully reciprocal. Microsoft is not only forging partnerships with Android heavyweights Samsung and HTC, but also announced that it may build its own smartphone if Nokia’s efforts fail. Regardless of Microsoft’s negotiations with Nokia’s competitors, Nokia will directly benefit from increased investments in Windows Phone 8. Microsoft has been heavily spending to increase the amount of applications in its Windows Phone Store, which currently offers 150,000 applications. Google Play and Apple’s (AAPL: Charts, News) iOS App Store are currently tied at approximately 700,000 applications. Investors should also be wary of Research in Motion (RIMM: Charts, News), which is often mentioned in the same breath as Nokia. Research in Motion, which has a new upgrade of its flagship BlackBerry operating system on the way, remains a favorite of enterprise customers, due to its more robust security protocols in comparison to Android or iOS. Several analysts believe RIM could stage a dramatic, unforeseen turnaround in 2013 with the January release of BlackBerry 10. Nokia CEO Stephen Elop, a former Microsoft employee, managed to slow Nokia’s rapid descent by simply admitting that the company had to change. The Finnish company’s first non-Finnish CEO’s first moves – to abandon Symbian and partner with his former employer Microsoft – were all initially met with widespread criticism and derision. Yet as a result Nokia has emerged leaner and more cost effective, and its shareholders have been rewarded with a small vestige of hope that didn’t exist before. Although some financial journalists and some analysts have speculated that Nokia may sell its mobile handset division to Huawei, Microsoft or Google (GOOG: Charts, News), Nokia management has denied all these rumors, and adamantly stated that it plans to stay active in the mobile business throughout 2013. No one is expecting Nokia to stage an immediate recovery in 2013, but a low price-to-sales ratio of 0.3 and a strong dividend yield of 6% should tempt patient value investors. In addition, the company still owns strong core assets, such as its mapping business and patent portfolio. Nokia’s stock price cannot be reliably measured with price-to-earnings, since the company posted six consecutive quarters of losses, but it trades at 0.98 times book value, which means that further downside is extremely limited unless its cash flow completely dries up. Other News About NOK Windows Phone Store Doubled in Size During 2012 Despite trailing Apple and Google, Windows Phone Store doubles in size. Will Nokia Corporation Leave Mobile Industry In 2013? Rumors circulate regarding Nokia’s future in the mobile industry. Other Stocks in the News Apple Wins Top Score for App Store Apple’s App Store remains the top choice for smartphone users. Starbucks Announces Much Anticipated Entry into the Dynamic Vietnam Market Starbucks expands into Vietnam. Copyright 2013 by InvestorGuide.com, Inc. InvestorGuide has no control over the sites we link to, is not affiliated with these sites, and cannot take responsibility for their quality or suitability. The news, analysis, commentary and profile information is not meant to be comprehensive, and the data provided is not guaranteed to be accurate. WebFinance Inc., the publisher of this newsletter, is not a registered investment advisor or a broker/dealer. This is not a stock recommendation newsletter but rather a source for investment ideas, and we encourage you to fully research any company before considering investing. The opinions expressed herein are those of the author and do not necessarily represent the views of nor are they endorsed by WebFinance Inc. No employee of WebFinance has owned or currently owns any shares in the company described above. The above is neither an offer nor solicitation to buy or sell any securities. The trading of securities may not be suitable for all potential readers of this newsletter, and the purchase of stocks mentioned in this newsletter may result in the loss of some or all of any investment made. We recommend that you consult a stockbroker or financial advisor before buying or selling securities or making investment decisions. We are not responsible for claims made by advertisers and sponsors. 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Leo Sun Leo Sun

is a freelance finance writer and position trader. He focuses on a combination of value and momentum investing, with a strong interest in the trading philosophies of Warren Buffett and Peter Lynch. Leo also has experience writing articles to help small business owners acquire loans and manage their finances. He regularly contributes to the Stock of the Day analysis.

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4 Responses to “Nokia (NOK) Bounces Back on Strong Windows Phone 8 Lumia Sales”

  1. Frederick Edwards says:

    correction: Nokia’s 52-week low was $1.63, also a 130% bounce from $1 would not be $4.18.

  2. Dan Fear says:

    It’s true, its not over yet for Nokia, but the path they are on is strong, both Symbian and Lumia lines are selling strong, Lumia for the high end and Symbian for the lower end. I hear the new Asha may take Symbians place, but no matter what right now, Nokia is on the right track of restoration, maybe not as the top, but as a more challenging competitor to the likes of Samsung and Apple.

  3. Frederic Fawles says:

    This is extremely uninformed journalism or just outright misleading:

    > Nokia CEO Stephen Elop, a former Microsoft employee, managed to slow Nokia’s rapid descent by simply admitting that the company had to change.

    ‘the burning platform memo’ by Stephen Elop led to one of the fastest descent of a big player in the history of corporations. Look at the charts, facts and data… everything indicates that Elop supercharged Nokia’s demise.

    To credit Elop with ‘slowing down Nokias rapid descent’ is wrong on so many levels… it’s mind boggling.

  4. Jesper Nyrup says:

    The path Nokia is on is strong !?!?
    Don’t make me laugh. Or rather I don’t know wheither to laugh or cry.
    Nokia is losing money, around 40% on each Lumia they sell, they are nowhere near the volumes they need to be at to be profitable. The fact that their mobiles sell out either is a marketing ploy or else points to very serious production issues, neither is good.
    Symbian is a dead man walking, doomed by Elop the idiot and he has also made sure that Nokia has no other options by closing or getting rid of things like Meego, Meltemi and other things. He then compounded the insanity by giving Microsoft (of all companies) royalty free access to Nokias patent warchest (this is just unbelievable)
    The cash is streaming out of their pockets and they currently have junk status with all credit rating agencies, they simply have no outs in this situation.
    There is simply no hope for Nokia, their mobile arm will be taken over by Huawei or another strong player.
    Elop should be fired and charged with fiduciary misconduct and sued into oblivion by Nokias shareholders

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