Nokia, Microsoft and the BlackBerry Target
Nate is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
The smartphone market is, to put it in straightforward terms, a mess. It's new and immature with a lot of competing tech out there not working well together and hyperpartisan opinion-makers all screaming about this, that or the other thing. Again, it's a mess.
There are a lot of players in the smartphone market; some have peaked, some are peaking, and some, who dropped a lot in the rankings, are trying to get back on top. That's where the partnership between Nokia (NYSE: NOK) and Microsoft (NASDAQ: MSFT) comes in. A recent article indicates that Nokia is in partnership to try to knock over BlackBerry (NASDAQ: BBRY).
Coming right on the heels of what appears to be a successful launch of the BlackBerry Z10, that's an ambitious goal for a phone developer that dropped from the top ranks long ago. But at Microsoft they certainly have a partner that is both motivated and has the muscle to promote the product. I'm surprised this sort of partnership hasn't happened before.
The fact that Nokia is trying to win over the business smartphone market with it's new Lumia phones is an interesting one. It also parallels Microsoft's 'win business' attitude by packaging Excel, Word and PowerPoint onboard. It'll be an interesting thing to see how well having those business apps on a phone motivates corporate buyers.
As for shares, Nokia has been trending up, slowly, for several months. Since July it's gone from $1.69 to $3.77. Double your money! And investors can get a lot of it for cheap! The firm had a good fourth quarter but is clearly still trying to find its way in the world. A 6.7% dividend helps make it attractive.
I love writing about Microsoft because no one ever thinks about them as a 'hot' tech firm. But they do very well. The focus on the appeal to the corporate and business world makes them suffer a bit in the minds of the average consumer. No one is ever going to mistake them for sexy. The magic of that is that the firm doesn't care.
The firm's stock trended down over the last year, maybe a bit more than 10%. Yet it's operating margin for 2012 was 29.92% and it pays a 3.31% dividend. There's still a lot to like about Microsoft if you can get past the whole public-perception thing. They do everything right to make money, and that's what you should want in an investment.
BlackBerry, formerly Research In Motion (sorta), is an interesting story. From what I've seen the launch of the BlackBerry Z10 is going well for the company. However, no one in their right minds can doubt that the firm was, not too long ago, given up for dead. It had been passed in the smartphone race by several competitors.
Still, since last September the firm's stock is up more than 100%, climbing from $$6.305 to $13.50. However, a lot of that is speculative, in my opinion, on BlackBerry's pulling off a real turnaround. While the firm turned an operating profit overall last year, for Q4 it's margin was -8.42%. If a combination of Microsoft and Nokia has decided to target them, BlackBerry will have some serious issues to deal with.
Google (NASDAQ: GOOG)
Google doesn't make the phones, of course. But its Android operating system sure runs a lot of them. That's where they are in the market right now, though, honestly, it wouldn't surprise me if the company launched its own hardware at some point. Even working with LG and Samsung, though, it's gained a lot of market share.
As I write this, Google has again climbed above the $800 per share value, and I don't see that as any sort of obstacle. The firm's P/E of 24.74 still indicates to me that I'm not alone in thinking there's still growth out there for Google. If it would just grow up and pay a dividend it would be a perfect investment.
Apple (NASDAQ: AAPL)
Apple, of course, is one of the major reasons that BlackBerry took its dive. It's also one of the reasons that Microsoft and Nokia are targeting BlackBerry. The two are taking aim at one of the weaker competitors in the field before trying to take a shot at either Google or Apple. It's unknown how many smartphone makers the market actually needs, but it's a safe bet that Apple will be in that final count.
Yes, Apple stock has tanked lately. We should all know that already. But I think that just makes it a strong value proposition at this point. The board got approved. A dividend is being paid now. There's a lot of room for Apple to grow quite a bit after the nonsensical stampede (based largely on media pressure and not on reality) burns out. Now's the time to get AAPL if you're going to.
As I said in the beginning, the smartphone industry is rapidly advancing. And big, big players are involving themselves and lining up for the fight. How little BlackBerry comes out of this, having been abused by Google and Apple and now in the sights of Microsoft? I'd suspect the firm is in for a rough ride. Heck, I wouldn't be surprised if there's a buyout at some point to ally the platform with some other monster tech giant. But who that'll be, I don't know.
Follow Nate on Twitter: @natewooley
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