I have written on Nokia (NOK) a number of times as I have made my observations and quite honestly I have been wrong every time. In an earlier article I wrote this year (back in March) I was bullish on the stock, giving a recommendation of buying October 2012 call option with a strike price of '6'. I should have listened to another author I quoted from Seeking Alpha in that article. Paulo Santos wrote is an article he titled: "Turning Negative on Nokia" these words:
Nokia is simply between a rock and a hard place, and the likelihood that it will emerge victorious seems too small to contemplate a positive opinion. I am not saying Nokia is a short, though, only that it's not a buy.
I quoted this in my article back in March but I did not listen to his opinion. In fact, I wrote again at the end of April that Nokia might have a long-term bullish opportunity. Well I give up. It is time to turn in the towel, I am done!
Sometimes we look for stocks like Nokia and we are thinking long-term turn around. Stocks like this are just waiting for investors who think of a long-term growth prospect and rumors always churn up the possibility of a buyout or acquisition when large companies get like this. Maybe technology moves to fast for complacent companies in this industry. But Apple (AAPL) and Google (GOOG) with smartphones have replaced Nokia and I am not sure if it will come back or not.
This time around, the investors who have weathered the storm are leaving. As of the time of this article Nokia is down 14.5% on the day to around $2.40 as it plans to cut its work-force (yet again) while it burns through cash and mulls over its future. It is expecting a "deeper than expected" loss as it continues to watch Apple, Samsung, and others pull away - it is even losing share in the cheap phone market that peddles basic phones. We have heard a lot about Lumina phones using Microsoft (MSFT) software, but sales have been slow and it does not seem like investors are happy at the moment. One analyst, Evli analyst Mikko Ervasti, said:
I won't comment on the stock price anymore, since it's been seen over and over, that there is no definitive bottom.
Personally, I would not be surprised if future expectations through this year are cut back some more.
Nothing good is happening in the company's immediate future. Leadership changes are taking place as Nokia announced the following executives are stepping down from the Nokia Leadership Team:
- Jerri DeVard, executive vice president and chief marketing officer
- Mary McDowell, executive vice president of Mobile Phones
- Niklas Savander, executive vice president of Markets
Those three are leaving and positions are being refilled on the leadership team. You know major transformation is taking place when shake ups at this level are taking place.
The point is I am ready to concede! With these last rounds of layoffs, I would not advise anyone to invest in Nokia through the rest of this year into the 2013. Within the last 15 months we've heard of 7,000 layoffs and outsourcing Symbian software to save $1 billion euros; 2,200 job cuts in a plant closing in Romania; November of 2011 it was announced that 17,000 jobs would be cut to save $1 billion in euros; and now 10,000 job cuts. And this the company is operating in the red with less than stellar sales.
Friends, I concede I am officially bearish on Nokia.