Nokia Adds Big Carrier Partners - Analyst Blog
November 16 2012 - 7:30AM
Zacks
Nokia Corporation
(NOK) has finally managed to get some big carrier partners to
revive its smartphone business. These carriers are believed to be
betting on Nokia, in order to reduce their dependence on
Apple Inc.’s (AAPL) iPhone and other Android-based
phones.
Recently, AT&T
Inc. (T) – the second largest carrier in the U.S. started
selling Nokia’s latest Lumia offering, while the biggest U.S.
carrier Verizon Communications Inc. (VZ) has
started taking pre orders for its customized Lumia 822 from
November 13. Moreover, T-Mobile USA, one of the top 4 U.S.
carriers, is also likely to offer Lumia 810, before the holiday
season ends.
In mainland China, China
Mobile Limited (CHL) has revealed its customized Lumia
920T offering, which is the first from the world’s largest mobile
operator. With a 3G penetration of as low as 19%, China provides
huge growth opportunity for Nokia, which has been a strong ground
for the company over the years.
Nokia provides the carriers the
opportunity to have their own customized Lumia, thereby
differentiating their products from the competitors. This is a
unique benefit, which will enable Nokia to win more carrier
partners particularly in the lucrative U.S. market, where it has
lagged over years. However, the lack of applications as compared to
Apple and Android has been the major cause of concern for
Nokia.
Tying up with these big carriers
couldn’t have come at a better time for the Finnish telecom giant
as Nokia will leverage from the marketing prowess of
Microsoft Corporation (MSFT), which will target
its huge user base to popularize its recently launched
Windows/Windows Phone 8 Operating System.
Nokia is expected to benefit from
the marketing push of the big operators, which are looking to add
on a third ecosystem to increase the competition in the smartphone
market. Higher smartphone subsidies to tap customers are eating up
on the margins of these carriers. Thus, a third OS will not only
reduce the carriers’ dependence on Android or iOS but will also
provide customers with wider choice given Lumia’s variety.
Nokia reported dismal results for
the third quarter of 2012, with the company shipping only 6.3
million smart devices, which include only 2.9 million Lumia series
phones. We believe this big carrier partnership could act as a boon
for Nokia to stamp Lumia’s mark as one of the biggest smartphone
brands in the world. However, Nokia will require more such
partnerships to create a niche for itself as Windows phone has
little customer acceptance till date.
We maintain our long-term Neutral
recommendation on Nokia. Currently, the company retains a Zacks #3
Rank, implying a short-term Hold rating.
APPLE INC (AAPL): Free Stock Analysis Report
CHINA MOBLE-ADR (CHL): Free Stock Analysis Report
MICROSOFT CORP (MSFT): Free Stock Analysis Report
NOKIA CP-ADR A (NOK): Free Stock Analysis Report
AT&T INC (T): Free Stock Analysis Report
VERIZON COMM (VZ): Free Stock Analysis Report
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