Nokia Manufacturing Improving?

| About: Nokia Corporation (NOK)

As legally recognized partial owners of a company, shareholders should be concerned how financial resources are allocated. It appears Nokia (NYSE:NOK) has understood that there is money to be made - or at least saved - by simplifying its smartphone manufacturing process, at least for some models.

The latest flagship smartphone announcements, the Lumia 925 in London on May 14, and the Lumia 928 in the US on May 10, will be available only in black, white and grey, and in black and white respectively.

The company is forced to recognize that, while it can be stylish, manufacturing solid, through and through colors increases costs and slows down the manufacturing process as I reported in an earlier article on Seeking Alpha called Nokia's Challenger Checklist.

Not only is it more expensive and slower, preferences for colors are difficult to predict. Managing this aspect in many markets throughout the world is an additional headache that wastes money. Color may seem like a trivial aspect at first but, with closer inspection, it's easy to conclude that it adds needless obstacles to overcome for an already struggling corporation.

For years, the iPhone was only available in black. Only recently has Apple (NASDAQ:AAPL) made it available in white. As well, the Galaxy S4 by Samsung (OTC:SSNLF) is also only available in black and white, and may be available in pebble blue in the future.

Not wanting to lose this differentiating quality, Nokia will allow users to add colors to their Lumia 925 and make some money in the process. The company has created an accessory in the form of a wireless charging cover, to be sold separately in red, yellow, black and white.

The Lumia 928 does not need a color back plate as it comes with wireless charging built-in. Users should still be able to accessorize their phone in multiple colors in the future either directly from Nokia or third parties, as it should.

Both models will be available quite quickly and this may be made possible with a simplified, faster manufacturing process. The 928 is available at Verizon (NYSE:VZ) only six days after launch on May 16. The 925 is expected to start selling in Europe and China in June, followed by an unspecified date in the US at T-Mobile (NASDAQ:TMUS).

Examinations of the specifications for both models indicate that they will be using mostly the same components as their big brother, the Lumia 920, released last November at AT&T (NYSE:T).

Shareholders hope that making the manufacturing process simpler, faster and more cost-efficient will translate into having these latest flagship devices available in greater numbers, more quickly and cheaply. Quick and repeated sellouts are only exciting if the numbers involved are millions, not thousands, as we have seen too often in the last year with other Lumia models here and abroad.

While those models are launching too late to have its full impact on 2013-Q2, if they can create new excitement around the Nokia Lumia brand, it can immediately act as a positive catalyst for the share price. Lumia units shipped this quarter may increase to 8 or 9 million from 5.6 in Q1. If that is the case, it would provide another much needed boost for the share price that fell off a cliff after 2012-Q4 and never recovered. If Nokia executes properly, Q3 and Q4 may generate the highest smartphones sales we've seen since Symbian was choked on a cold Finnish winter night in 2011. This can also have a positive impact on the share price of Microsoft (NASDAQ:MSFT) as higher Windows Phone royalties are generated and the outlook for its mobile operating system is improved.

Disclosure: I am long NOK. 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.

Additional disclosure: NOK makes up a large portion of my portfolio. I have been long since May 2011 with an average cost-price of $4.30.

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