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Nokia (NOK) took a beating today.

(click to enlarge)

Reviewers generally agreed that the new features of Nokia's flagship Lumia 820 and 920 handsets - improved sensitivity for the 4.5 inch display screen, wireless charging, 4G network capability, Pureview camera and Nokia's advanced mapping and location services - were impressive. CNET loved it. The Verge loved it. Benzinga loved it. The Boy Genius Report loved it. PC Advisor loved it. In fact, I have yet to read any disparaging reviews about the Lumia in the technophile press. Wired and PC World have yet to weigh in, but I doubt they'll buck the trend.

BGR:

Compared to smartphones from vendors such as Samsung (005930), Motorola and LG, Nokia's Lumia phones are in a completely different league. There are no flimsy plastic covers or cheap-feeling buttons, just a high-quality unibody plastic case that feels terrific in the hand.

Benzinga:

The phone is gorgeous, clever, and contains some of the most creative features ever seen in a smartphone.

The Verge:

the Lumia 920 essentially matches the top-tier of what's available on Android in all the important specs, unless you absolutely must have a super-sized screen, although Nokia is boasting that its 1280 x 768 PureMotion HD+ screen offers better quality.

So what happened?

Hypothesis A: Microsoft Is To Blame

One view is that the Win8 OS was "underwhelming," though everyone knows that Win8 is going to be improved iteratively over the next 6-12 months. This hasn't killed any other new product releases. Google's (GOOG) Chrome browser is the poster child of iterative "agile" development, and the number of Chrome users increased with every new version Google released.

Perhaps after years of disappointment, investors just weren't willing to wait any longer.

I don't buy this hypothesis: If Win8 is in trouble, then Redmond's whole mobile strategy is toast, including the upcoming MS Surface. So why aren't investors dumping Microsoft? (MSFT) Shares actually ticked higher after the Lumia reveal.

Hypothesis B: Qualcomm Is to Blame

This hypothesis has a bit more meat on it. QCOM Snapdragon processor is a dual-core processor. The latest phones from Samsung Electronics Co., Huawei and LG have four cores.

On the other hand, the current iPad has a dual-core 1GHz Cortex-A9 central processor, and that doesn't seem to be hurting sales a bit. The Snapdragon S4 is also reportedly 30% more efficient than its quad-core rivals, adding significant battery life to the Lumia handset.

Hypothesis C: Nokia Screwed Up The Presentation

Now we're getting somewhere. In a world where new Apple (AAPL) product releases are "magical," Nokia can't grab the attention it deserves giving low-key presentations like this. The CEO can't walk across the stage with mussed hair, blue jeans and a business jacket.

Appearance is everything.

But the deal breaker for financial analysts was simply that Nokia didn't release any pricing information or availability details. It didn't even let investors know which carriers the phone would use. This was a severe error. "Available in select markets" doesn't tell investors anything, and Wall St. hates uncertainty like mortal sin. Nokia had all the time in the world to make the new Lumia reveal awe-inspiring. It should have been PERFECT. It wasn't.

Hypothesis D: Nokia Isn't Named After A Fruit

Bezinga's Louis Bedigian summed it up in three short sentences:

- it (the Lumia 920) would be huge if it had an Apple emblem on the back. If the aforementioned features appeared on the iPhone 5, people would think that it is the most innovative smartphone released in years. [emphasis added]

Now, to be fair, every mobile handset manufacturer originally has this problem. The absence of a fruit logo didn't stop Samsung's Galaxy from trumping iPhone sales with a mobile OS that was inferior to both Windows 7.5 "Mango" and iOS5.

Hypothesis E: Awful Timing

Ding-ding-ding-ding! We have a winner! Scheduling the Lumia reveal a week before Apple's release of iPhone 5 no doubt seemed audacious at the time, but in retrospect, it would have been better to get the hell out of Apple's way. The rollout would have gone a thousand times more smoothly and received rave reviews from investors if it was released two months ago, or if everyone was already familiar with Windows 8 and knew what to expect. In a world where Win8 has yet to be officially released, there is simply no way for uncertainty about consumer adoption not to trump hope in the near term.

Bottom Line

  1. I still like Nokia. The company's stock trading well below its book value. It has a new product line that is receiving excellent reviews from the techie community. It has an attractive dividend yield, and massive patent portfolio, and assuming that it hasn't eroded its cash base yet, the company still has $6 billion on hand.

    At the moment, Nokia is trading at the lowest estimate of the value of its patent portfolio (BMO Capital Markets, $2.5 billion), a valuation which I frankly consider to be punitive, because it assumes that Nokia's wireless division is worth $0, as well a fire sale of Nokia's patents at 10 cents on the dollar. More generous estimates run the gamut from $5-$13 billion. The company already earns about $650+ million annually from its patent royalties, including Apple, which has signed a contract worth millions per quarter for patents it uses in the iPhone and iPad. A more aggressive patent litigation strategy could bring in hundreds of millions a year more.
  2. I still like the Lumia handsets. If Samsung had released this phone, the financial press would have thrown a rave.

  3. It may be time for a change of management.

    Recommendation: HOLD
Source: Reviewers Love The Nokia Lumia, So Why Did The Stock Tank?