Nokia (NOK) continues to receive strong reviews following its lackluster rollout, resulting in a significant bounce in the stock from its 15% plunge following the September 5th product reveal. I believe that investors overreacted to the lack of carrier information and release date and that analysts have been overly punitive in calculating the company's intrinsic value. The "evolutionary, not revolutionary" nature of the new iPhone 5 is breathing life into the Windows 8/Nokia revamp for many technophiles who are looking for a fundamentally new experience which they feel is lacking in the iPhone 5. These tech-savvy consumers will form a solid base for Nokia to rally around, provided that the Lumia is competitively priced.
Let me say that again: Nokia cannot afford delusions of grandeur when it comes to pricing. There is no Nokia "Reality Distortion Field" for the Finnish based company to work with, but there very well may be an Elop Effect.
The Elop Effect is based upon miscommunication, not mismanagement. Nokia's CEO Stephen Elop blew a multi-billion dollar hole in his own company by announcing that Nokia's phones were obsolete in the now-infamous "burning platform memo," leading to a reseller-boycott and the general worldwide collapse of the brand. In the words of former Nokia manager Tomi T. Ahonen, the man who coined the term:
He's (Elop) already destroyed a company the size of Oracle, and profits the size of Google.
To be fair, Mr. Ahonen is not Stephen Elop's #1 fan. (That's putting it delicately.) However, given the contrast between the poorly received media rollout of the Nokia 920 with the praise the handset itself has recieved from reviewers, have made Ahonen's views worthy of serious consideration. Other current and former employees at Nokia, such as David Weinehallm, have gone so far as to accuse Nokia's CEO of being a "Microsoft Mole," a rumor that was so pervasive that Elop felt the need to address it directly at the Mobile World Congress.
At this point, all Nokia has to bank on is probably the most innovative smartphone of 2012, and a group of slight technophiles who will be more than happy to send their money over to Samsung if Nokia decides to price the Lumia 920 at parity with the ATIV S.
Were I Nokia's CEO, I would be less concerned at this point with how much Nokia managed to squeeze out of each handset and more concerned about there being enough units sold to justify a sequel. I'd make sure investors knew exactly what the strategy was, too. Step 2 can - and would - be about net profit per unit. The first step is to regain consumer's trust in the Nokia brand. To do that, the Lumia has to change hearts and minds. And to do that, the Lumia has to be in circulation by Black Friday.
I believe that positive reviews for the Nokia 920/820 handsets will continue to drive the stock higher in the short-term. (I've recommended it previously as an asset play, based on its extensive patent portfolio.) However, I must include some caveat, here: The Lumia 920/820 handsets were scheduled to be released in October.
However, recent reports suggest that availability will be pushed back until November, while Microsoft works to improve the functionality of the OS. Should the Lumia be rolled out any later than that - in early December, for instance - it would fundamentally alter the calculus against Nokia as anything but a patent play.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.