Will Nokia Rebound To Prove The Bears Wrong In Q3 And Q4 Of 2013?

| About: Nokia Corporation (NOK)

Once a giant in the cell phone industry, Nokia (NYSE: NOK) has faced challenges in the new millennium with the ever-increasing number of options in the mobile phone and personal device market. Once a pioneer in the telecommunications industry, having created the first handheld cell phone in 1987, the Finnish company has struggled for several years now, facing bold new industry innovators who have become staunch competitors.

Nokia's Resilient Nature Put to the Test

No longer recognized as a telecommunications Goliath on the cutting edge of its field as it was during the 1980s and 1990s, Nokia's position in the market was overtaken by Samsung (OTC:SSNLF) in March 2012 as the world's largest maker of cell phones. As Nokia's history has shown; however, the company is not one to lay down its arms and surrender. Even though things seem grim at the moment, per NASDAQ, since Motorola, Inc. (NYSE:MSI), Ericsson (NASDAQ:ERIC)and other companies are trading better than Nokia, the company has a plan to improve its market capitalization.

Who Are Nokia's Main Competitors?

  • Apple, Inc.'s (NASDAQ:AAPL) iPhone. Nokia, among other mobile manufacturers, has been overwhelmed by the power of iPhone and its iOS, watching its own products swiftly become obsolete with each new iPhone update. Fast Company remarks that, as many other mobile phone makers, Nokia simply couldn't keep up with the iPhone's fast and continuing success.
  • Android. Google's (NASDAQ:GOOG) Android is really Nokia's largest competitor, particularly in developing countries around the world. Google is marketing the Android to areas of the world with people who cannot afford the price tag of the iOS but who understand that access to the Internet and smartphone benefits will help improve their lifestyles. The same benefits apply to less wealthy populations within first world countries. Samsung's Android is edging out the iPhone, so Nokia definitely has their work cut out for them where the Android is concerned.

Nokia Seeks New Ways to Stand Out Next to Competitors

On July 28, 2013, Value Walk's Michelle Jones reported that Nokia is in the midst of a turn-around. Though the bears are impatient, sniping that the slow rate of turn-around; it doesn't change the fact that Nokia is poised for a shake-up, at least due in part to its line of Lumia products. The exciting camera phone is one-of-a-kind in terms of pixelation, featuring a massive 41 megapixel sensor, low light sensitivity, xenon flash, optical image stabilization and much more.
Jones goes on to note that, as Nokia phases out the idea of a feature phone in favor of low-end smartphones, which is in demand, the Windows Phone - the Lumia line - seems to be taking off at the approach of its first anniversary, adding sting to the turn-around buzz. The numbers speak to this assertion since Lumia sales increased at the end of the June quarter by 32 percent, which translates to 7.4 billion units shipped.

The Carrier Solutions

Another issue that had debilitated Nokia's progress was finding carriers for its phones. Recently striking deals with Verizon and Telefonica, carrier issues seem to be on the wane.

Nokia's Earnings Outlook and What it All Means to Potential Investors

Market Consensus posted about Nokia's impressive recovery after its 20 percent slump in the first quarter of 2013. Since the company's April 2013 plunge after three of the previous quarters resulting in lost revenue, Nokia seems to be increasing its profit margins. Given the second-quarter uptick, companies such as Market Consensus might reduce their early July emphasis to place any investment into Nokia on "hold" status. As Nokia continues to adapt to the current market, finding ways to wedge itself in among the world of smartphone giants, potential investors should continue to monitor the increasing profit margins. Although they are still negative, Nokia is seeing improvement with Q3 of 2012 at -18.69 percent, Q4 of 2012 at -13.38 percent and Q1 of 2013 at -4.64 percent.

While Nokia's future in the market is still somewhat uncertain, the telecommunications company continues to find ways to reinvent itself and adjust to the changing needs and desires of mobile phone users in the 21st century. With favorable catalysts such as the 41 megapixel camera embedded into the Lumia, the company shows that it can still find a unique niche to stand out. Investors should continue to monitor progress with a cautiously optimistic "wait and see" approach.

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.