Nokia Downgraded to Underperform - Analyst Blog
April 13 2012 - 1:04PM
Zacks
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
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