What Tech Company Will Make a Nice Addition to Your Portfolio in 2013?
Naomi is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Over the years, Apple (NASDAQ: AAPL) has been the darling of many investors in the smartphone stock market, but with the recent decline in its share price, it has become necessary to have an alternative smartphone company to serve as a reliable backup. This does not mean that Apple is no longer viable, but I feel an addition will have to be made to be on the safer side. In this case, which smartphone stock would it be? Let’s take a good look at Apple, Nokia (NYSE: NOK) and Research In Motion (NASDAQ: BBRY).
Apple, Nokia and RIMM in Focus:
According to a report published by Kantartech, Apple’s smartphone market share in the United States alone is about 53%. Reports have it that smartphones make up 50% of the mobile devices being used in the US and this simply means that 25% of these mobile devices are Apple products. In comparison to Nokia, its Windows Mobile is only maintaining a paltry 2.7% market share in the US; although in Europe, especially in France, Spain, Italy and United Kingdom, the Finnish company is maintaining a reasonable percentage of market share. As for RIMM, the cloud has never been darker as the company continues to lose market share across several continents.
Apple in Focus:
Although there have been speculations that the company’s performance will be less than average, but with Apple selling about 2 million new iPhone 5s in China three days after the launch of the product, these expectations are being dispelled. Also, the fact that the company is looking into the future by spending around $9.4 billion in 2012 towards cloud servicing and expansion of its hardware, is another plus. With this expansion, it means that in the future, Apple will be relying less on supplier companies for most of the parts in its products. The benefit of this for the company and consumers is that since the company will have maximum control of its supply-chain, cases of delay in production and minimal product supply will be greatly minimized.
The decline in the company’s stock price has nothing to do with the company’s financial standing, since from the 10-K form it filed with the SEC for the fiscal year 2012 showed Apple has continued to grow financially. The decline is purely sentimental because it is assumed by most investors that Apple failed to meet their expectations with the launch of the iPhone 5.
Nokia in Focus:
Although there was much hype about Nokia selling out a huge number of Lumia 920 phones during its launch, their sales was actually low and was mostly attributed to supply issues. With this realization by investors, a damp blanket was put over the assumptions that Nokia would break a $5.00 price mark. Although the Lumia 920 came with innovative features and other additions that were made in order to greatly distinguish it from the Lumia 800 range, it was unable to generate much buzz. Even with the exclusive carrier rights partnership the company entered into with AT&T, a company that has been in the forefront as far as carrier billing is concerned and has made it possible for consumers to pay for various services and products using their mobile devices, the sales of the Lumia 920 phones did not experience any form of accelerated sales.
Nokia’s saving grace could be the deal it struck with China Mobile (NYSE: CHL), the biggest global cellular operator. With a 197% increase recorded in the sales of smartphones in China in Q2 of 2012 and Nokia’s exclusive smartphone access to not less than 700 million Chinese subscribers through its partnership with China Mobile, this could turn out to be good for the company.
RIM in Focus:
After the report on the new fee structure that was been initiated by RIMM as regards services associated with the company’s Blackberry 10 phones, the stock suffered a decline of 23%. Although RIMM has looked forward to doing new things with the release of the Blackberry 10, with big contenders in the smartphone market like Apple, Google, and Nokia; it will not be an easy task, especially in terms of reaping huge profits. The release of the product in January could have little or no impact on RIMM’s revenue stream. Another reason why the release of the Blackberry 10 might not create much hype is the fact that apart from its top-notch security features, the smartphones from RIMM lacks a higher percentage of what it takes to guarantee excellent user experience.
Overall stock performance of the trio
Nokia has experienced a 22.37% decline in its stock price from the beginning of 2012 with RIMM going down by 29.66% from the beginning of the same year. Apple on its part, even as the shares continued to drop, is up by 26.29% from the beginning of 2012. This means that even with the decline in its stock price, Apple, aided by its cash flow, strong-hold in the smartphone market and unprecedented sales, has continued to perform better than Nokia and RIMM. The fact that what Apple has been doing is re-inventing existing products while Nokia and RIMM keep getting innovative and releasing new products changes little or nothing on the market share of Apple. So, come 2013, it becomes your choice to make on which of these stocks to add to your portfolio, based on the information at the tip of your fingers.
Chizy has no positions in the stocks mentioned above. The Motley Fool owns shares of Apple and China Mobile. Motley Fool newsletter services recommend Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!