Nokia Grows Strong
Muhammad is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Nokia (NYSE: NOK) may have multiple successes coming its way in a very short period of time. Nokia’s share price has been rising due to all the positivity surrounding the company. Shares of the company have been between the range of $3.75 and $3.90, and are gradually rising away from the 52 week low.
Nokia has recently given a hard time to two of the biggest giants in the smartphone market: Apple (NASDAQ: AAPL) and Research in Motion (NASDAQ: BBRY). Apple is threatened by Nokia’s success in some of its major markets, while RIM was recently taken down by Nokia in a legal dispute.
Nokia against Apple
One of the most recent announcements by Nokia that caused a surge in its stock price was about the launch of the company’s newest smartphone, the Lumia 920, on China Mobile, China’s biggest network carrier. What makes this agreement a huge deal for Nokia is the fact that China Mobile is not only the biggest 3G network in China, but is the biggest network carrier in the world in accordance with the number of subscribers.
With this agreement, Nokia will enter into direct competition with Apple in one of the biggest smartphone markets in the world. Apple has claimed dominance over all the major markets in the recent past, but with the rising demand for Nokia’s smartphones, Apple may lose its control soon. Apple’s iPhone is not compatible with the standards of the network, while Nokia’s Lumia 920 is completely compatible, making it the perfect choice for the network to promote. With the support from China Mobile, the sales of Nokia’s Lumia 920 are expected to strengthen while the popularity of the iPhone is expected to drop.
With this deal, the Nokia Lumia 920 will officially be launched in the country and will cause a hike in sales of the device. This will also influence the prospective revenue for Nokia, creating possibilities for higher profits. Nokia is the leading brand of smartphones that are powered by Microsoft’s Windows Phone 8 operating system. According to statistics from mobile firm AdDuplex, Nokia’s flagship device Lumia 920 will be the most popular when compared with other devices running on Windows Phone 8.
To make things worse for Apple, along with giants like Samsung and Nokia, the local smartphone makers of China have been rising in popularity in the Chinese market causing a further slip in Apple’s sales. The company that once ruled the Chinese market is now down at number 6 as local smartphone manufacturers start to gain higher market share.
Nokia against RIM
Nokia recently won a legal dispute against RIM that resulted in a positive attitude by investors toward the company. Nokia holds some of the major patents in mobile technology and receives royalties from all the major companies. RIM had a licensing agreement with Nokia in 2003 allowing RIM to use “standards-essential” technologies for mobile devices. The dispute took place when RIM started using WLAN technology in its devices without consulting with Nokia regarding royalties. As a result of arbitration, Nokia won the dispute, strengthening its position.
In my opinion, investors should buy Nokia’s stocks, as the prospects of its financial performance seem very bright. The Finnish phone manufacturer has been struggling with its position in the market for a considerably long period of time, and that hard time seems to be coming to an end now. With Nokia’s association with the biggest network carrier in the world, sales of Nokia’s smartphones are sure to rise, and this will surely influence the profitability of the company in a positive manner. The optimistic anticipation regarding the prospective performance of the company will continue to push its share price to a higher level and short term investors can benefit from its opportunity. With an improved position against the biggest smartphone company in the world, Nokia seems to have taken a huge leap towards success.
muhammadbazil has no positions in the stocks mentioned above. The Motley Fool owns shares of Apple. 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!