Nokia Love Hate Relationship

| About: Nokia Corporation (NOK)

With the recent press release and demo of the upcoming Lumia 920, there has been a barrage of press, most of it negative. The transition from the old Nokia to the new Nokia (NYSE:NOK) will take time. The financial press is unwilling to give Nokia any benefit of doubt. The glaring disconnect is that the technical press is applauding the virtues of both Lumia 920 design and new hardware features. Yes, Nokia did disappoint us with their lack of clarity on pricing and carrier alignments but the purpose of the press release and subsequent demonstrations met its intended goal of introducing us to the new Lumia design and feature set.

Nokia Corporation provides telecommunications infrastructure hardware, software and services worldwide. The company offers smartphones and smart devices; and feature phones, and related services and applications. It provides feature phones and smartphones under the Nokia brand; and mobile devices under the Vertu name. The company also develops a range of location-based products and services for consumers; platform services and local commerce services for device manufacturers, application developers, Internet services providers, merchants, and advertisers; and digital map information, and related location-based content and services for mobile navigation devices, automotive navigation systems, Internet-based mapping applications, and government and business solutions.

In the world of mobile technology marketing, when you are competing with Samsung (OTC:SSNLF) and Apple (NASDAQ:AAPL), you need to execute flawlessly and be able to deliver on time and on message. Nokia missed on these two fronts but I believe the financial press was too tough on Nokia, which sent shares tumbling from a 30 day high of $3.31 to a low on September 5 of $2.89. In addition to the missing details on pricing and availability, Nokia's advertising was challenged as to the source of the video, which the press concluded was shot on the Lumia 920 since it was demonstrating the new PureView image stabilization technology.

(Click to enlarge)

Strike #1 No pricing or carrier details

Strike #2 Advertising mistake

Strike #3 No firm launch details or global market forecasts

(Click to enlarge)

In the case of the Lumia 920, three strikes does not put it out. The technical press is singing the praises of image stabilization technology, form factor, screen size and clarity as well as the potential for the Windows Mobile 8 operating system. The factor that the financial press missed, although I understand the disappointment in execution, is that the battle has just begun and will be won or lost at the point of sale, not in the press. Nokia had little strategic choice but to announce and demonstrate the new devices given the Apple conference September 12 and the success of the Galaxy S3 selling over 20 million units in 100 days.

Better launch execution and advertising clarity would have gone a long way to placating the press but the fact still remains that Nokia needed to release their information in anticipation of a November launch prior to the Apple iPhone 5 event, which will likely dominate the press. At least we now know definitively what the new Nokia device capabilities are. When pricing and carrier information is announced, consumers will be able to make an educated decision. The iPhone has some quality competition from both Android and, now that we have seen the Lumia 920, in the future Nokia.

When viewed through the lens of a global product rather than a USA carrier centric perspective, the Lumia 920 should be a potent long-term competitor.

In anticipation of a November full-scale launch I remain long Nokia. In addition to a long position we have three option positions designed to leverage a move to the upside with some protection on the downside.

  • October Call purchased with a strike of $3.00 trading today at $.19 premium
  • January 13 Call purchased with a strike of $5.00 trading today at $.08 premium
  • January 13 Put (sold to open) with a strike of $2.5 at a $.46 premium today.

Disclosure: I am long NOK. 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.