Nokia (NOK) is appealing for various positions in the market due to the combination of a very low stock price complemented by a strong global brand alongside substantial speculation and interest regarding its near term and long term outlook. Current shareholders and interested investors can utilize Nokia as an effective candidate for a short sell or a short squeeze. Nokia may even be viable for a long term investment with robust capital appreciation. Nokia is effectively restructuring the organization to capitalize on the growing mobile data industry. Nokia is forming strong partnerships with major tech firms, wireless carriers and operators that are invested and benefit in seeing it rebound into prominence. With the improvement of the Nokia Siemens Network and its smart device segment, Nokia may soon reestablish its position as one the premier players in the mobile industry.
Research in Motion (RIMM) is most comparable to the headwinds and potential obscurity that Nokia's future has been faced with. Research in Motion will also have a new Blackberry device that it's hoping will herald in its resurgence from the projected launch in early 2013. New products from both Nokia and Research in Motion will be carried by Verizon (VZ); AT&T (T) has been carrying Nokia's Lumia series since mid-2012.
Nokia's future and projected rebound in the wireless sector depends greatly on the popularity of Microsoft's (MSFT) new mobile Windows 8 OS. Both AT&T and Verizon want a successful Windows 8 device launch in order to have a third viable OS that can improve competition and lower the subsidy costs they're paying on other smartphones like Apple's iPhones. It's important to consider all of these firms' metrics to anticipate the fluctuations in their market prices in the near term and long term.
All of these stocks are closely related for the remainder of 2012; movement or news from one can dictate the behavior of the others. Nokia's future is more immediate and uncertain; hedging interest in either telecom like AT&T or Verizon is advised. Developments or news about Microsoft or Windows 8 OS may dictate Nokia's performance in the market, as Nokia's failure or success will provide insight and influence Research in Motion's market price. Nokia's market cap is around $11.4 billion while its price is around $3 per share; Research in Motion's cap is around $4 billion while its price is around $7.50 per share.
Nokia's price-to-book ratio is around, 0.98 while Research in Motion's is around 0.41. Both are more than 50% away from their 52-week high and have price-to-sales ratios around 0.25. Nokia has the lowest EPS of -$1.20; Research in Motion is around -$0.09 while Microsoft has the highest EPS of $2.00. Research in Motion's 5 year sales growth was 43% while it had a 42% sales deficit in the past quarter, YOY. Nokia's has sales deficit of 1.23% and 18.6%, respectively. AT&T's five years sales growth was 14% while Microsoft's was 7.6%; Microsoft has the highest sales growth in the past quarter, YOY of 3.98%.
Microsoft also had the highest return on equity of 27% while Nokia has the largest deficit of 32%. Nokia's annualized dividend is around $0.26 while Verizon's is around $2.00. Nokia's debt-to-equity ratio is around 0.58 while Research in Motion's is around zero. Both of these have beta scores around 1.5, Nokia's average daily volume is the highest at around 56 million shares, Research in Motion is around 19 million shares. Nokia's stock is down 33% YTD through mid-September while Research in Motion is down 47%. But, Nokia stock has increased 12.8% over the past month, the highest growth among the aforementioned firms. Nokia's stock has increased by around 34.6% since its last earnings release.
Nokia's recent earnings release gave some insight for a bullish outlook on Nokia's long-term projections. Second quarter total net sales was $9.87 billion, a 3% sequentially but a 19% decrease, YOY. Second quarter net sales from the Devices & Services division was $5.26 billion, a 5% decrease sequentially and 26% decrease, YOY. Location & Commerce net sales was $370 million, a 2% increase sequentially and 4% increase, YOY. Nokia Siemens Network net sales totaled $4.37 billion, a 13% increase sequentially. Nokia shipped 4 million Lumia phones in the second quarter and expects Windows 8 to lead to growth here for the remainder of 2012.
Location & Commerce is growing from strong partnerships with search engines like Bing alongside robust sales in the auto industry from automakers like Ford (F). Second quarter Devices net sales increased 38% sequentially and 45%, YOY in North America while overall operating expenses decreased 3% sequentially and 14%, YOY. Nokia expects to decrease Devices operating expenses by $3.93 billion by 2013. Average selling prices in Devices increased with the advent of the Lumia series. Nokia filed for more patents than any other first half since 2007, while its Nokia Siemens Network is growing from a renewed focus on the mobile sector and key divestments of non-core assets. Nokia anticipates negative impacts from competition in the Devices division while it projects a $1.3 billion reduction in Nokia Siemens Network operating expenses by 2013.
Nokia Siemens Network net sales grew sequentially in every market, a 63% sequential increase in Greater China. Focusing on mobile broadband networks bodes well for Nokia's growth in the near and long term. In the second quarter it was building 3G, Wi-Fi and LTE 4G networks for T-Mobile and operators in Japan, Singapore, Thailand, Eastern Europe, Saudi Arabia and Nokia Siemens Network set a new global TD-LTE speed record in China.
Nokia certainly faces headwinds in its attempt to regain market share in the mobile sector. It recently mishandled its latest device unveiling and faces competition from Samsung who will have a Windows 8 device as well. Depending on Windows 8 may even be a long shot; Android has 68% of the smartphone market while Apple has 17%. There are no details on price or release dates from Nokia, which only fuels the speculation and will dictate more movement and fluctuations in the market. Nokia may currently be talking with everything concerning exclusivity in the UK, its new device is expected to first hit major European markets in early November and the US soon thereafter.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.