After a strong month, the beleaguered Nokia
Corporation (
NOK
,
quote
) is plunging again. The Finnish communications giant has suffered
a 36.55% drop in the share price so far this year.
[caption id="attachment_73130" align="alignright" width="300"
caption="Nokia's new Lumia 920, the first smartphone to run Windows
8 OS"]
[/caption]
But sales to emerging markets could help save Nokia.
Nokia's situation is unlikely to improve any time soon, given
that Apple Incorporated (
AAPL
,
quote
) will release the iPhone 5 on September 12. If anyone remembers,
the Lumia 900 was introduced over Easter weekend this year.
The mere
anticipation of the success of the iPhone 5
has vaulted Apple's share price so high it is now the most valuable
publicly traded firm in the world. After the Lumia 900 debut, the
share price of Nokia sank.
Though Nokia's new Lumia 920 is coming out in October
-- the first smartphone running the new Windows 8 operating
system (
MSFT
,
quote
), if the
bungled launch is any indication
, it will likely do little for the stock.
But the company could be revitalized by sales of feature phones
in emerging markets. While Nokia is pulling back in China, it is
moving ahead
aggressively in other emerging markets
such as India and Indonesia.
There is a huge demand for feature phones in emerging markets,
and Nokia does not have to compete against Apple in this
segment of the telecom market. Feature phones have more
capabilities than basic mobile phones but are not as capable as
smartphones.
In countries that do not have the infrastructure or the consumer
affluence to support demand for smartphones, Nokia feature
phones more than suffice. As the second-biggest seller of
mobile phones in the world, the Finnish company has a global
franchise that can capitalize on demand for these products.
Now trading at about $2.80, Nokia is selling at a price-to-sales
ratio of just 0.25. The price-to-book ratio is only 0.84. Although
earnings and sales are down for this year, earnings-per-share
growth is projected to grow by 85% for the next year. If this is to
happen and the share price rebounds, feature phone sales in
countries like India will be providing the revenues.
