Nokia Is the Smart(phone) Bet - Barron's

Includes: AAPL, BBRY, NOK
by: Rachael Granby

Nokia's (NYSE:NOK) surprise warning on Friday that Q3 market share would be lower than expected sent shares tumbling 7.6% to $20.62. Barron's believes the drop in share price makes Nokia a bargain, and expects long-term growth.

Nokia still expects to see an increase in market share for the year, and indicated that Friday's warning of lost market share was mostly on the lower end where competitors have drastically reduced the price of basic handsets. Nokia's focus, however, is less on market share and more on profitable growth. As smartphones become ever more popular among average users and emerging market customers, Nokia will be in position to boost its profit margins by providing sophisticated handsets at reasonable prices. Nokia has lost some smartphone market share to niche players Apple (NASDAQ:AAPL) and Research in Motion (RIMM), as expected, but has retained its spot as the world's largest seller of smartphones, and has new products like the E71 smartphone on the way.

  • Mark Sue of RBC Capital Markets has a one-year target of $31.


  • Gartner sees global sales of mobile phones growing to 1.28B units in 2008, an 11% increase from 2007. Sales are increasingly likely to rely on growth in emerging markets.