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Nokia Corporation (ADR) (NOK), Apple Inc. (AAPL): Smartphone War: The Emperors Strike Back?

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Cellphones have always been perceived by their brand. Businessmen have shown their style with a Research In Motion Ltd (NASDAQ:BBRY) and Sony Ericsson has launched many youthful devices. However, things have changed. The market for smartphones has matured. Not long ago, the iPhone OS and Android began their domination in the smartphone market. Soon, old giants like Nokia Corporation (ADR) (NYSE:NOK), Blackberry and Microsoft Corporation (NASDAQ:MSFT) found themselves playing catch-up. Apple Inc. (NASDAQ:AAPL) is credited with bringing about this change with the first iPhone.

Soon, rival Samsung entered the market and has raced to the top with its frequent launch of bolder and smarter smartphones like the Samsung Galaxy S4. To regain lost ground, old giants like Nokia and Blackberry have come up with refreshed operating systems and refined designs. Can they take back their positions from Samsung, Google and Apple?

How they size up

According to data from market research firm IDC, Samsung had about 39% market share versus Apple’s 25% in fiscal year 2012. In 2011, Samsung and Apple were about equal at 19%. Apple Inc. (NASDAQ:AAPL) has been continuously losing its market share to Samsung, as seen in the table below. Even with the launch of iPhone 5 in 2012, it has not been able to knock out Samsung. Samsung has been clearly reigning the smartphone market with a 39.6% market share in 2012.

Source: www.engadget.com

The old giants: Nokia and Blackberry

With the launch of the Lumia smartphones, Nokia Corporation (ADR) (NYSE:NOK) is aiming to regain its lost market share. It has introduced its Lumia smartphones at different price points, targeting consumers with different budgets. The Lumia phones have great camera optics, an excellent navigation tool in the form of Nokia Maps and a free music service. 2013 could be a great year for Nokia as the Lumia phones are getting good reviews.

Nokia Corporation (ADR) (NOK)

On the other hand, Blackberry  has launched its new BB10 smartphone. 2012 was not been a great year for Blackberry: with the company losing market share to Apple Inc. (NASDAQ:AAPL) and Samsung by almost 5%. BB10 has been receiving positive response and will be available in the U.S. starting March 22. With Blackberry Messenger Service messenger, secure enterprise services and an unique user interface based on the concept of hub-peek-flow, it is surely back in the competition.

Valuation

The following table shows a comparative analysis of the valuations of the major smartphone players. Both Nokia Corporation (ADR) (NYSE:NOK) and Blackberry stocks have the lowest price-to-sales ratios and look less profitable compared to Apple and Microsoft. Apple Inc. (NASDAQ:AAPL) has the highest predicted EPS growth followed by Blackberry and Microsoft. While a value investor looking to add low price multiple stocks to his portfolio could consider Blackberry and Nokia, a growth investor would be more than willing to add Apple, Blackberry and Microsoft to his portfolio.

From a $6.35 per share price in September, Blackberry has climbed to $16.40 per share. Nokia Corporation (ADR) (NYSE:NOK) shares have also been performing well and have risen from its July price of $1.69 to a current price of $3.42 per share. Apple Inc. (NASDAQ:AAPL) is currently trading between $400 and $450 after reaching a $700 high in September. The fall in the price has mainly been because of heavy competition in the smartphone industry. However, with plans of releasing a new iPhone this fall and a loyal customer base, there is no reason why it could not regain the number one position in the smartphone market.

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