Yesterday, an interesting story came out that China Mobile Limited (CHL) will be selling Nokia Corporation's (NOK) new Lumia 920 in the most populous nation. The majority of the news lately on Nokia has been on the company's new smart phones and how the company botched the presentation of the new phone that saw shares trade down over 15%.
China Mobile is the largest phone carrier in the world with 688 million subscribers, as of July 31. With its impressive subscriber numbers, China Mobile has a 70% market share in China and a 40% share in the coveted 3G market. With China set to be the number one smart phone market by volume, this announcement should have sent shares up more than yesterday's 7% increase.
There have been rumors for years now that China Mobile would begin selling the iPhone. Apple has even had talks with the large telecommunications company about a possible partnership. The new iPhone 5 is said to be the biggest rival with the new Lumia 920. A deal for China Mobile to sell the iPhone could send shares of Nokia down on news.
Nokia is set to launch the Lumia 820 and 920 in the United States this fall. No release date or costs were released in the event presentation. In the United States, AT&T (T) and Verizon Communications (VZ) have been confirmed to carry the device. Many originally believed that Windows 8 devices would hit the market before the iPhone 5. It now appears that the Nokia Lumia 920 will be available in October or November. AT&T lists November 2 as the available date for subscribers.
In China, rivals China Unicom (CHU) and China Telecom (CHA) are set to bring rival phones to the region. One of the phones set to enter the market is the Samsung Galaxy SIII, which was the target of the Apple Samsung patent lawsuit. Both China Unicom and China Telecom have sold versions of the iPhone over the years in China.
Potential winners from yesterday's announcement and increased sales of the Lumia 920 include Synaptics (SYNA) and Qualcomm (QCOM). Synaptics has a Clear Pad Series 3 touchscreen controller in every phone. Qualcomm's Snapdragon dual core processor is featured in the phone. Qualcomm, of course, is featured in the iPhone 5 as well, which is why shares are trading close to their 52-week high. Strong sales from both phones could see Qualcomm hit levels not seen since the dot-com boom in 2001.
Shares of Nokia trade at $2.94 at the time of writing. Shares have traded between $1.63 and $7.38 throughout the last 52 weeks. Shares have traded down 43% since that start of 2012 and now sit down 91% in the last five years. I think that the launch of the Lumia 920 gets Nokia shares over $5.
But first of all, why does the $5 mark matter if this was a stock that traded over $7 less than 12 months ago and over $20 a couple of years ago. Well, the $5 mark takes the stock away from true penny stock territory. A move above $5 also would allow more mutual funds to pick up shares of the company, as $5 is the minimum for many funds to invest in a company's shares.
Many investors and analysts have listed the Lumia 920 as the make or break product for Nokia. Nokia's market share has decreased in many of its markets and it has been unable to keep up with competitors. I am a believer in Nokia as a sub-$5 stock and think that shares are a screaming bargain. If the Lumia 920 does not have strong sales, shares will drop and talks to sell key patents will escalate, as Nokia has a strong portfolio of patents that many have argued are not being valued in the company's share price.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in NOK over the next 72 hours.