5 Reasons To Consider Nokia

| About: Nokia Corporation (NOK)

Now that the big Mobile World Congress trade show is done, we can look at the world of mobile with a 'here and now' perspective, and not have to worry about rumors on upcoming announcements. Overall, Nokia (NYSE:NOK) took a hit at the show due to inflated expectations on closer linkage with Microsoft (NASDAQ:MSFT), and hopes for minor miracles on execution on their Windows based Lumia handset portfolio. While Nokia is no Apple or even Samsung, here are five reasons to think that the worst is probably behind them, and that the forward looking view gives cause for optimism. While short-term investors will not find this statement exciting enough, my intention here is to provide longer-term investors some parameters to consider in terms of looking at an entry point for Nokia.

So on to five things that suggest that you go long on Nokia :

  1. "Successful" Platform Transition. With any company like Nokia that has been the emperor for so long, there are a number of cultural issues (e.g. around employee resentment of outside platforms) that could have made this move a complete disaster. To Nokia's credit, they released first one and now four Lumia phones on time. And the fact that won the MWC best new mobile handset award is creditable. While the Lumia tailwind faces a Symbian headwind, the positive reception of Lumia gives them something to work with.
  2. A "Good" Dividend Cut. It may seem odd to use a positive word with the act of slashing the dividend, the event was positive in two ways. First, it maintained the divided (20 cents euro or about 4% given today's trade) at a point where it is attractive to income oriented investors. At the same time, the fact that the dividend is covered by earnings and the hefty cash position (see below) would make income investors more comfortable with its sustainability.
  3. Book Value & Cash. You have a company trading at $5.29 with a book value plus cash adding up to about $8.4 per share. That combined with Trefis' $6.50 valuation should give value investors a sense that the company has the staying power to work out its product issues.
  4. Patents. Yeah, yeah - doesn't every big, old company that has product issues have a patent trove these days? Well yes, but Nokia's is actually worth something. According to Oceantomo, a company that specializes in evaluating patent portfolios, Nokia's portfolio is in the top 25 companies on the planet. Looking at the partial list I've included below, being #24 may not seem impressive, but consider that the highly regarded Qualcomm (NASDAQ:QCOM) is in close range at #22.
    (Click to enlarge)
  5. Mobile Operator Support. If there was one clear message from Mobile World Congress, it was that operators are scared and worried about the Apple (NASDAQ:AAPL) and Google (NASDAQ:GOOG) domination of the mobile space [with Facebook (NASDAQ:FB) looming]. While they can never go back to the world where they were king of the hill, they are rooting for a company like Nokia that is from within the industry. If Nokia's products show strength, look for operators to put the extra oomph in promoting them.

While life isn't a bed of roses for Nokia, long-term investors might want to take the above into consideration, and get paid an attractive dividend while they wait.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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