Investors and consumers alike have focused on Nokia’s failures to compete with the iPhone and with the Android smartphones. At first glance, this appears to be fair- Nokia’s stock is down almost 90% since Apple released the first iPhone. Meanwhile, Apple ( AAPL) is up 335%. Nokia has five revenue sources however, and their other four revenue sources appear promising. In the 3 rd Quarter 2012 Earnings Call, Nokia ( NOK) CEO Stephan Elop named Smart Devices, Mobile Devices, Intellectual Property, Locations and Commerce, and Nokia Siemens Group as revenue streams. I discussed Intellectual Property in a previous article ( click here ) and will focus on Smart Devices in an article which will be published later this week. Mobile Devices, Locations and Commerce, and Nokia Siemens Group are the three most overlooked revenue streams for Nokia, but they will prove integral to the company’s future.
Nokia further subdivides its mobile handset business into Smart Devices and Mobile Devices. Mobile Devices, or feature phones still represent almost 50% of phone sales in the United States, and over 50% of phone sales worldwide. In the mobile device arena, Nokia had long been the industry leader. In fact, it was not until 2012 Q1 that Samsung passed Nokia for the global lead in handset sales. Despite this recent development, basic phone sales remain a profitable operation for Nokia. Nokia commands 35% market share in basic phone sales and their basic phones out sold their smart phones at a rate of 7 to 1 during the 2 nd Quarter of 2012. Basic phone sales, propelled by the popular Asha line contributed 49% more revenue in the 2nd Quarter than smartphone sales.
The Asha phones contain many of the same features as smart phones, such as touch screens, social media integration, limited app support, built in cameras, and even Wi-Fi capabilities. However, These phones run on Nokia’s series40 operating system, which is simpler and cheaper to manufacture than conventional smart phones, allowing Nokia to price these phones very aggressively.Mobile Devices are key to Elop’s vision for Nokia’s future. In the 2012 3rd Quarter earnings call, Elop, the CEO said, “It is our strategy to connect the next billion people to the internet via our mobile phone products”, a reference to the billions of people in emerging markets who still do not have Wi-Fi on their phones. By adding Wi-Fi to basic phones, Nokia hopes to attract price conscious consumers in emerging markets, and maintain their loyalty in a few years when they seek to upgrade to full-feature smartphones. Due to Nokia’s dominant position in emerging markets and strong basic phone sales, many analysts have speculated that in the event that Nokia fails and is sold in pieces, its Mobile Device segment may fetch the highest bid.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV