Nokia (NOK) has had a heavy presence in the news this week, but I believe the various news events will have both positive and negative effects on the stock.
A rumor is circulating, suggesting that Facebook (FB) will purchase Nokia. The rumor also suggests that the result of this relationship will be a smartphone going by the name of FacePhone. Many have ridiculed the idea of Facebook launching its own smartphone. If the company does buy Nokia for $10 billion, however, this is something that may just happen after all. Of the two companies, this will be more beneficial for Facebook, as Nokia runs the risk of losing its identity as a separate entity if Facebook does indeed purchase the company.
One thing that will play nicely into Facebook's hands is the fact that Nokia and Microsoft (MSFT) have a hardware-operating system partnership. Facebook will be able to make use of this partnership in its creation of its own smartphone, assuming these rumors are true. The combination of the three companies: Facebook, Nokia, and Microsoft, could make for a powerful force in the tech market. If Facebook does not choose to purchase Nokia, furthermore, it could purchase Research In Motion (RIMM), the maker of BlackBerry. This kind of action is something that Facebook has to do to become a serious tech stock now, especially since it is struggling to recover from complications over its initial launch on the NASDAQ. Everyone wants a smartphone, so the production of smartphones is a great way forward. Facebook certainly has a lot of problems to overcome though, so a rumor will not help Facebook stock much at all.
One of the ways in which Nokia and Microsoft collaborate is with Bing Maps, a Microsoft product. Nokia recently announced that it would be supplying traffic data for Bing maps. The system will allow users to learn about events that could make their journey difficult. The app will also allow them to find alternative routes that will get them to their destination with minimal worry and hassle. In other words, it will make maps easier and better for Bing users. Although it has yet to catch up with dominating search engine Google (GOOG), Bing is doing fairly well, and it may soon start taking a few bites out of Google's market share value. When that happens, Microsoft and Nokia will both be sitting pretty.
The latest Nokia Lumia is experiencing a number of problems. For example, it cannot install apps like Angry Birds and Skype, things that a lot of people see as being an important part of having a smartphone. In the case of Angry Birds, however, a new version of the game will soon be released that will be able to run on the low memory phone. This will be a slight consolation to users, but this problem will still have a negative influence on Nokia stock.
Nokia and Microsoft were trying to avoid the fragmentation issues suffered by Google's Android phones, and it seemed like a good idea. The results, however, have been less than ideal. People have simple needs. Most people who buy a smartphone don't just buy it so that they can play Angry Birds wherever they are. This is clearly not the most important feature of a phone. It could have a serious impact on sales though, if people purchase it expecting to be able to install Angry Birds or something like it, only to discover that it is not possible. Not being able to install something as necessary for modern life as Skype can also give a phone as well (as the company that manufactures it) a bad name indeed. It is also quite a disappointment to see that although the phone runs Windows, many Windows apps simply do not function on it. Entering the smartphone market is a great idea in the current climate, but you have to get it right. This makes me wonder if Facebook should purchase Research In Motion instead, as Nokia's reputation is quite questionable at the moment.
Nokia has some good ideas, and like other writers, I still believe that the stock holds promise. It needs to get its act together though, and put the necessary thought and effort into its inventions. Hopefully, its next smartphone offering will be better, and I also hope it will be able to deal with the problems faced by the current Lumia.
Oracle (ORCL) recently received bad news, as its claims against Google were overruled. The tech company attempted to sue Google for using Java script in its Android phones. Oracle claims that since it owns Java, the Java programming language is its to control. You cannot patent a language though. In addition, Java is open source, which means that it is available for use by anyone who wants to use it. The jury found that Oracle has the copyright on the language, but the jury also found that Google did not do anything wrong when it decided to use it. This is a major blow for Oracle. The company would have received a significant payout if the court case had gone in its favor, so this will have a positive impact on Google and a negative impact on Oracle.
Oracle will just have to hope for better luck with its court case against Hewlett-Packard (HPQ). In a case that will begin soon, HP plans to sue Oracle over breaking an agreement related to Itanium chips. This does leave stockholders wondering about HP's strategy. Someone needs to tell the company that suing more powerful tech stocks is not the way to make your mark in the industry, especially if you end up losing and looking bad at the end of it. This is still cause for concern for Oracle, however, as the company has already had difficulty in court. As a result, the stock price will likely be dropping in the near future. In the long term, however, Oracle has a strong position and plans for growth that will help it do well, making it a better stock than it may appear at the moment.
There are news events that are pulling several stocks in multiple directions. The rumors about Facebook purchasing Nokia will have a fairly neutral effect on Nokia stock, as there are advantages and disadvantages to this purchase. The trouble with its smartphone will have a slightly negative impact, but it is still in good position for the long-term. While companies like Google seem to be better investments at the moment, Nokia remains in a position to do well, even if it will likely face short-term losses resulting from the smartphone difficulties.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.