Nokia: Lumia 900, Expansion Make Me Cautiously Optimistic

| About: Nokia Corporation (NOK)

Nokia (NOK) is working very hard to compete with competitors in the smartphone department, such as Apple (AAPL). The Lumia 800C smartphone entering the Chinese market is the latest of such developments. This is its first Window-based smartphone and it will be sold through China Telecom (CHA). The price tag of this smartphone is $570, which is quite steep for many people, so the company will also be adding a less expensive phone, the Lumia 610C, to the Lumia product portfolio. Two other companies will also be joining on to sell these products in China, China Mobile Limited (CHL) and China Unicom Limited (CHU).

Apple is always innovating, moving forward with the iPhone 4S last year and planning to unveil the iPhone 5 sooner than most people's pocketbooks would like to know. Nokia is shifting its focus to China and India in an attempt to tap the markets that Apple is overlooking, because Apple seems to be too big of a giant in the United States.

It is also planning to ship the Lumia 900, a 4G-enabled Windows smartphone, in the States at the low price of $99.99 beginning this April. This is a major launch for Nokia, because AT&T (T) is partnering up with Nokia to make it something that is bigger than anything that has gone before it, including all of the iPhone launches. It will include a mammoth TV ad campaign that consists of some ads that make fun of Apple and Google (GOOG). This launch could jumpstart the company in the United States at the same time as it is going big in China and India, meaning that great things could be ahead for Nokia.

Nokia landed itself on the Pre-Market Most Active list in early April. It opened Tuesday up 0.01 at around $5.48 per share, having seen 101,367 shares traded. Apple also landed itself on this list, opening up 8.12 with prices around $626.75 and having seen 418,929 shares traded.

Nokia is sitting quite low in price per share compared to a year ago. Its 52 week low is around $4.46 and its 52 week high is around $9.42. The current price of around $5.45 per share is near the bottom of that range. This is in part because Apple has been booming lately, and Nokia is having trouble keeping up. Fortunately, the launch of the Lumia 900 is expected to turn that around. The low price, coupled with the projected success in the near future, led to Town Hall upgrading Nokia to a buy rating.

At the same time that the "buy" rating was being achieved, other analysts had their say about Nokia. The previous rating of "perform" by Oppenheimer (OPY) analysts was downgraded to "underperform. A "neutral" rating on shares was restated by Nomura (NMR) analysts. Another bad piece of news is that Barclays Capital (BCS) lowered the projected target price for Nokia shares to $8, down from $10 previously, and gave the stock a rating of "overweight."

This is a grim outlook, contrasting from the "buy" rating and the great plans that I was talking about before. I think that the lowered expectations are indicative of the recent struggles that Nokia has had competing with competitors like Apple in this economy. Nokia just does not have the strength to compete with the structural giant that Apple has created. By the way, Apple also has a "buy" rating on its shares. I would not get too down about Nokia, however, because the promise of big things with the launch of the Lumia 900, and the possibilities that are opened up by moving into the markets of China and India, make it very likely that Nokia will see better days soon. It is a great time to buy.

Nokia and Siemens (SI) have NOK)+(SI)/7318069.html" rel="nofollow">completed a transaction to "outsource the maintenance, technical support and R&D for the Operations Support System (OSS) and Subscriber Data Management (SDM) activities in Finland, including the transfer of 238 Nokia Siemens Networks employees, to Tieto" Corporation (TIE1V: FH). This agreement could be quite lucrative for Nokia.

Nokia, with its market cap of $20.15 billion, has had better days, but it certainly could be worse. It will be fine if it keeps pushing forward and innovating to get ahead of the competition.

There is currently some turmoil in the nano-SIM territory. Apple is under fire for allegedly having taken actions to increase its voting power with the European Telecommunications Standards Institute (ETSI) in regard to nano-SIM standards. ETSI has delayed a ruling on whether or not the allegations are true, but this is certainly not something that Apple wants to deal with right now. Nokia is holding out that it will not give Apple the rights to its patents. This sort of issue is why Apple has had its way in the past. Apple has the resources and connections that other companies do not. However, other companies are catching up and Apple can not run ahead of the industry forever.

In my opinion the struggles are going to continue for Nokia. I would, however, say that I expect to see great things come out of the Lumia 900 and the business in China and India. All things considered, I am feeling cautiously optimistic about Nokia's future.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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