) low-end smartphone - Asha has performed well in the fourth
quarter of 2012, outpacing the good show of its flagship product
Lumia. Gaining significant market traction in the emerging market
is primarily attributable for the good results.
Nokia's preliminary report shows that the company has sold 9.3
million units of Asha range of handsets in the fourth quarter,
far better than the 6.5 million sold in the previous quarter,
thereby posting an impressive sequential growth of 43%.
On September 25, 2012, Nokia launched two new affordable touch
screen phones based on Series 40 operating system to improve its
presence in the mass market. The budget phones have features like
- 3 inch screen, 800 MHz processors, a 2 mega pixel back camera
and are preloaded with EA games.
Apart from Asha, the company's high end smartphone Lumia sold
4.4 million devices in the fourth quarter of 2012 compared to
only 2.9 million units in the previous quarter, marking a
sequential growth of almost 52%. Encouraging contribution from
Nokia's high and low end smartphone range has resulted in the
better than expected performance by the company in the forth
Although Lumia is taking lion's share of the credit for the
improved show from the Finnish handset manufacturer, we believe
Asha's encouraging sales figures act as a backup support for
Nokia, while it continues to aggressively market Lumia.
Nokia faced a lackluster 2012, as the company lost its title
as the world's largest cell phone manufacturer to Samsung
Electronics. Amid stiff competition from
) Android and
) iOS-based phones, the company lost its smartphone
However, the company's decision to join hands with
) is finally paying its dividend as the latest Lumia 920 and
Lumia 820 have performed better than its predecessors and based
on that Nokia is reporting an increase in smartphone shipments
for the first time in a year.
Historically, China, India and Latin America have been strong
markets for Nokia and off late the company has seen its Asha
sales grow in those regions. Low per capita income and increased
wireless Internet usage have mainly contributed to the inspiring
show where, customers still prefer low budget phones. However,
with Android quickly penetrating these markets, it remains to be
seen whether Nokia can sustain this
We maintain our long-term Neutral recommendation on Nokia
Corporation. Currently, it holds a short-term Zacks Rank #3
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