Okay, after having followed Nokia closely for the last couple of years, I have often encountered situations where I've been forced to share my opinion on Nokia - and why I believe in an eventual turnaround.
Surely; these encounters have helped me with developing my analysis, and core arguments. Here I will develop or present some of the arguments without really taking a financial approach.
Let's, skip the results from last quarter where Nokia turned around for the first time after seven straight quarters in red.
1) Patent Portfolio
Yes, The patent portfolio. Lately this has gained more attention from media and analysts; still it's underappreciated by the stock market. How come people price a possible chapter 11 (as they did last summer with the NOK stock) but choose not to price a possible take-over bid?
The patent portfolio surely provides Nokia with some intrinsic value. It is very hard to put some value on such thing, as it consists of various possible revenue streams. But to summarize it somehow; Nokia has the largest and most essential patent portfolio in the mobile industry. More than 10.000 patent families, and on-going royalties coming from more than 40 companies.
Some people dislike S.Elop. I like him. I believe that the greatest fruit of his work are yet to be shown. We probably will see some at MWC 2013. However, with Elop as a CEO Nokia has developed and regained its position as the most innovative mobile manufacturer. Just look at Nokia Lumia 920 and compare it with its competitors. Lumia 920 is innovative - Iphone 5 e.g. is not.
Nokia is gaining mind share, it is starting to look youth, new and interesting. Nowadays I see people with the colourful Lumia 920 in their hands when taking the bus or the subway, before I did not do it. Surfing into its facebook page, you see young, beautiful people holding and wearing Nokia phones, accessories. Nokia is looking young and attractive again.
I do not really remember how thing were a couple of years ago, as I have somehow a bad memory of things. However, I think that this was not the case in 2007, with the introduction with Iphone and Symbian platform starting to decline. Nokia are delivering and transforming into a more effective and innovative player. One thing I like about Elop is that he has changed the mentality at Nokia, and that he really has tried to bring the innovations from that massive r and d spending budget into its products. We have seen that with L920.
3) Cash position and management
Although having lost massive market shares and sales, Nokia managed last quarter to increase its cash flow, very positive. My belief is that great management creates great companies and not the other way around. To therefore witness the flexibility of Nokia managements in its most difficult situation to be able to cut outflows, employees and focus its spending in a brilliant way, only strengthens my belief on the Nokia group.
Surely, there are more arguments, and I will of course share them in another article.
Disclosure: I am long NOK.