Nokia NOK now takes over the Windows 8 Smartphone market by capturing a staggering 80% share, making it a dominant industry leader. The good news was warmly welcome in the trading floors with rising Nokia stock prices in the past few days. Many investors are hoping that this will fuel the start of NOK rally after a downbeat trend that hit bottom on April 1, when the share price closed at $3.26 per share versus the benchmark price of $4.11 on January 2, losing a dismal -20.68% year-to-date growth.
When the report was out regarding upbeat Nokia Lumia sales and strengthening market share, Nokia's declining share prices started to correct, and it seems that NOK is probably poised for a rally in the ensuing days. This will be further boosted by an upcoming first quarter financial reports due for release come April 18.
If the figures are encouraging, the rally should persist for the entire second quarter. Many investors are optimistic that the first quarter figures will be encouraging, based on the Adduplex report that shows Nokia enjoying 80% of the Windows 8 smartphone market.
Nokia Market Share by Brand
According to the Adduplex report, the most widely used Windows phone device today is Nokia Lumia 920, garnering 14% of the global market share. Toe-to-toe with the same percentage share is Nokia Lumia 800. On the second spot is Nokia Lumia 710 with 13%, followed by Nokia Lumia 610 and Nokia Lumia 820 at 11% and 8% share, respectively.
Also grabbing some pieces of the market share pie are the Lumia 620 with 7% share, the Lumia 900 with 4%, and the Nokia Lumia 822 with 3% share. The remaining 20% of the share are held on to by its peers like HTC, the second place by brand with 14% of the share, and Samsung (OTC:SSNLF) with 5% share.
By taking a look at the picture, you will observe that the market share of Nokia Lumia 920 alone is equivalent to the market share of HTC entire line of Smartphones. And Samsung's entire Windows-powered smartphone lines are a little lower than the market share of Lumia 620.
The report shows that Nokia's Lumia series has a growing control of the company's total revenues, and its global sales can greatly affect the business performance of the company, as well as NOK's share prices to some extent. So NOK shareholders and investors should also keep an eye on Lumia's worldwide sales as one of the cues for buying or for selling.
Nokia Sales Performance
While Nokia's Lumia smartphone series has a commanding control of the Windows 8 Smartphone industry, it is still not the major catalyst of NOK's total revenues. According to the company's latest 4th quarter and 2012 full year report released last January 10, majority of the total revenues still came from the Asha full-touch smartphone.
Out of the 15.9 million units sold in 2012, Lumia sales only accounted for 27.67% with 4.4 million units. Asha Smartphone, on the other hand, comprised 58.49% of the total sales at 9.3 million units, while the rest or the 2.2 million units came from the Symbian Smartphone. Therefore, investors should give more emphasis on the global sales of Asha full-touch smartphone since the figure can greatly affect the share prices. However, Lumia sales should not all together be disregarded.
It's hard to trade purely relying on speculations and market outlook. One has to take a look at the company's financial standing to ascertain the stability of the firm and its capacity to make a bullish run or to maintain it.
In the case of NOK, the income statement and the balance sheets figures are not quite attractive. Total revenues for the past 3 years were declining. This is due to the declining market share of Nokia in the entire Smartphone industry, which is largely dominated by Samsung and Apple AAPL.
In 2010, NOK generated $56.944 billion in total revenues. This declined to only $50.186 billion in 2011, or a growth of -11.87%. This further weakened to $39.784 billion in 2012, or a disappointing -20.72% growth. The last time the company saw net income was in 2010 when it was able to earn $1.802 billion. After that, it incurred losses in 2011 and in 2012 at $1.932 billion and $4.995 billion, respectively.
But despite incurring net losses for the past two years, NOK still managed to give out yearly dividends to its shareholders. In fact, it consistently paid out annual dividends year over year since 2005. However, the amount paid has declined since 2010.
Share prices of NOK may have plunged from the start of the year, but it is now starting to correct. If NOK is going to report a good first quarter performance, then the prices are expected to pursue its bullish trend. NOK for now is not yet a major player in the smartphone market, but with the impressive performances of its Lumia lines, it may start to grab a bigger slice of the market.
This is affirmed by Vesa Jutila, the marketing head of Nokia Windows phone 8 during the Mobile World Congress 2013, when he said that he sees a 10% increase in Smartphone market share by next fiscal year 2014. In 2012, Nokia holds the no. 3 spot with only 4.9% share. It is trailing behind AAPL with 19.1% share, while the market is largely dominated by SNLF with a commanding 30.3% share. If his projections will materialize, then NOK will be getting closer to AAPL and the sales figures should also be better. This will hopefully fuel the bullish run of NOK.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.