Sometimes we are quick to form a conclusion on certain issues based on limited thought process or from information that we take in only via our experience.
Deep quantitative analysis and structured thought process might lead us to a very different conclusion.
The consensus seem to be that Nokia is very dead after their smartphone mess-up. However recently they did a partnership with MSFT, who had their own share of smartphone mess-up as well.
My friends here in Singapore won’t give this 2 a chance. Singapore is predominately conquered by iPhones. The other choices would be Android. New Nokia adoption is equally dead.
So should we then conclude that Nokia is not a value play?
I have to say as a tech geek I have not form a conclusion for MSFT and NOK. This domain is too fast moving and hard to visualize what is the trend in 1 year let alone 5 years.
Here is a interesting article from Seeking Alpha for a good Sunday Read >> Nokia Presents Rewarding Opportunity at Current Levels
I would like to hear what folks think about Nokia from the contrarian perspective. I have highlighted some interesting comments from the post to get everyone thinking:
Despite the compelling value and dividend payment from Nokia, MSFT offers better value. Its dividend is far lower, but MSFT will stand to benefit greatly in its partnership with NOK. MSFT simply needs to keep producing and growing its app market.
RIMM’s new partnership with android (via playbook) was a surprise, but this news is developing. Android app store is a mess and "free" apps can devastate the mobile space. Still, it is still an evolving scenario.
Still, this is a good write-up. NOK’s bold leap will pay off for investors who jump in now, and get paid 6.5% waiting for the partnership to bear fruit.
Frank, you need to get the facts (accurate numbers) right.
Nokia shipped 452.9 millions handsets in 2010, that’s more 1 million per day!
The last quarter, Nokia shipped around 120 millions!
Your number is 95% off.
5 millions new Symbian devices in fourth quarter, it means new smart phones.
Nokia’s problem was margin compression, I saw it back in early 2008 when first iPhone came out. Their old CEO made the matter worse, pour gasoline on the fire.
But margin is so low now, very easy to improve once they start ship WP.
I am Long and I read almost all 280 pages 20F and considered all the downside risks.
There were 1.5 billion mobile devices shipped in 2010. Nokia shipped 30 percent of them at average price of $91. Apple shipped 3% at an average price of $550.
Obviously, Microsoft needs to help Nokia shipped more costly smart phones while Nokia keeps shipping lots of feature (dumb) phones. Microsoft also needs to finish W8 for all devices so Nokia can pick and choose smart phone and tablet designs.
This shouldn’t be too difficult for the worlds best and largest phone and software companies but they should take the 12+ months to finally get it done right.
Nice article. I think your value analysis says it all. Investors have been reacting unusually ’emotional’ following the "Nokia goes Windows Mobile announcement" and it certainly has created a decent investment opportunity.
I have very little to add to the points you laid out. In the next 18 months we will start to see state-of the-art Nokia phones running on the type of OS that can finally start giving iPhone and Android a run for their money. Google knows this very well, exactly the reason they were courting Nokia heavily as well.
You can assume that the CEO of Deutsche Telekom knows what he’s talking about when he says consumers want choice. This NOK-MSFT hook-up provides exactly the kind of diversification that the industry is looking for when servicing the consumer.
A stable dividend, approximately 6,5% at these levels, from a high-cash flow company with ample revenue streams (Nokia Siemens Networks as the author pointed out) was a good enough reason for me to include this stock in my portfolio at these levels to hold for a few years while this all plays out.
One of Nokia’s key market is China.
Since Google (Android) has run afoul of the Chinese authorities, it gotta be an opportunity for NoWin there.
Right now Nokia is almost priced for extinction, but a combined $60 billion net cash with Microsoft won’t go out of lights that easily.
I see Nokia all over India as the most popular ‘dumb’ phone. Every man and his cow has one: