Nokia Downgraded to Underperform - Analyst Blog

By
A A A

Nokia Corp. ( NOK ) is currently in difficult straits. Recently, Nokia issued a revised financial guidance for the first half of 2012, which was significantly below its earlier guidance.

Nokia is in a transition phase for its legacy Symbian software-based mobile feature phones to Windows software-based smartphones and tablets. However, we remain very much skeptical regarding the success of the Nokia-Microsoft mobile venture.

Though Lumia smartphones are much improved offerings from Nokia, we are not very sure whether this device will be able to gain market share from Apple Inc. ( AAPL ) developed iPhone or Google Inc. ( GOOG ) developed Android based smartphones. Already, Nokia has suffered a serious software glitch for Lumia 900 device, its much hyped first 4G LTE enabled smartphone.

We believe the company will face margin pressure throughout 2012, mainly due to a highly competitive industry dynamics. We downgrade our recommendation on Nokia to Underperform.

Recently, Nokia suffered a major blow when its much hyped flagship Lumia 900 smartphone faces software glitch in the U.S. Lumia was Nokia's first 4G LTE-enabled smartphone. The U.S. telecom giant AT&T Inc. ( T ) was it carrier partner.

Nokia said Lumia 900 could at times lose its high-speed data connection and that the company would effectively give away the device for a short period. We remain concerned regarding Nokia's future business relationship with AT&T.

A firm carrier partnership is a precondition in the U.S. for the commercial success of any mobile phone. For smartphones, this is a necessary condition since these feature-rich phones are very costly for which carrier subsidy is required to offer a competitive price.

A major concern for Nokia is its apparent difficulties in understanding the importance of the carrier-manufacturer partnership in the U.S. Therefore, the company is being increasingly marginalized in the lucrative U.S. market.


 
APPLE INC ( AAPL ): Free Stock Analysis Report
 
GOOGLE INC-CL A ( GOOG ): Free Stock Analysis Report
 
NOKIA CP-ADR A ( NOK ): Free Stock Analysis Report
 
AT&T INC ( T ): Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: AAPL , GOOG , NOK , T

Zacks.com

Zacks.com

More from Zacks.com:

Related Videos

Your Car Is Spying on You
Your Car Is Spying on You           

Stocks

Referenced

Most Active by Volume

73,078,214
  • $30.33 ▼ 3.90%
57,046,796
  • $15.52 ▲ 0.45%
51,290,831
  • $100.57 ▲ 0.04%
39,855,468
  • $8.13 ▲ 1.37%
31,693,544
  • $5.50 ▲ 20.35%
31,532,510
  • $10.33 ▲ 0.78%
31,526,753
  • $39.10 ▲ 47.21%
28,366,542
  • $26.36 ▲ 1.19%
As of 8/20/2014, 04:04 PM

Find a Credit Card

Select a credit card product by:
Select an offer:
Search
Data Provided by BankRate.com