fg1973's  Instablog

Nokia (NOK) is a global leader in mobile communications whose products still are an integral part of lives around the world. According to Nokia, "more than 1.3 billion people use their Nokia on a day to day basis." (http://press.nokia.com/2012/04/27/nokia-comments-on-standard-poors-credit-rating-announcement/)

Nokia had been in the last 20 years one of the most known brands around the world and had helped people to change the way they live.

It's true that in the last 5 years they lost some of the advantage they have built before. Apple (AAPL) and Samsung (SSNLF) were two of the main responsible for this disadvantage. Nokia fails to understand what people want now.

They are losing market share around the world and they are losing money. However they still are the number one in terms of cell phones sold worldwide and as Nokia CEO says: "As we have detailed in recent announcements, Nokia is in the middle of a transformation program which encompasses every aspect of our business. We are implementing a decisive action plan to position our company for future growth and success. The main focus of these actions is on lowering the company's costs, improving cash flow and maintaining a strong financial position, while bringing attractive new products to market. Nokia's financial position remains strong. As of March 31, 2012, Nokia had gross cash balances of EUR 9.8 billion, and a net cash position of EUR 4.9 billion." (press.nokia.com/2012/04/27/nokia-comment...)

Besides all this, the market value of Nokia at 2 of May is only 9.9 billion Euros. The markets didn't believe that Nokia can do the necessary turnaround.

I do think that the markets are forgetting:

1) the power that Nokia still have in most of the world - they can use their really powerful supply chain to make their new products easy available all over the world;

2) the advantages of their partnership with Microsoft (their first really phone - Lumia - is with no doubt a great phone);

3) they are working together on a tablet;

4) it seems that they finally are working on what peoples wants - Lumia and tablet;

5) don't forget that their main markets are China and India and they are working hard to go came back to USA;

6) besides that, don't forget that Nokia it's very important to Finland's economy - there can be some political pressure to "help" Nokia.

All in all, I do believe that we need a stronger Nokia at least to make pressure on Apple and Samsung and to continue to give us good options on the cell phones (and tablets) markets.

A final advice for Nokia's board: until Nokia starts earning money again, please end the dividend; please keep cash on the balance.

Disclosure: I am long NOK.