Nokia Corporation (ADR) (NOK) Could Be in Big Trouble: Microsoft Corporation (MSFT)

Page 1 of 2

Nokia Corporation (ADR) (NYSE:NOK) currently sits between a rock and hard place. Its feature phone business is feeling the effects of the smartphone revolution, and its smartphone business isn’t necessarily knocking it out of the park. Between the two, it’s safe to say that Nokia is lagging behind the competition, forcing it to make up for lost time. To compensate, Nokia has taken a rather aggressive approach in the way that it prices its smartphones relative to the competition. Focusing primarily in the emerging-market segment as its bread-and-butter opportunity, Nokia Corporation (ADR) (NYSE:NOK) seems determined to give the competition a run for its money within markets that have lower smartphone saturation. However, it doesn’t necessarily guarantee the company’s success, especially for a company that’s in Nokia’s difficult position.

Nokia Corporation (ADR) (NOK)

More pain ahead
Between its feature phone business and its smartphone business, Nokia Corporation (ADR) (NYSE:NOK) is currently fighting a war on two fronts. Unfortunately, Nokia’s feature phone business has one foot in the grave. IDC is forecasting that 2013 will be the year that smartphone shipments will surpass feature phone shipments for the first time. In other words, we’re right on the cusp of the beginning of the end for feature phone shipments. Considering Nokia’s feature phone business made up over 50% of the company’s device revenue last quarter and it commanded a higher gross profit margin than its smartphone business, Nokia faces structural headwinds in the years ahead as the industry transitions away from feature phones.

Having largely missed the boat on the smartphone revolution, Nokia Corporation (ADR) (NYSE:NOK) was practically forced into partnership with Microsoft Corporation (NASDAQ:MSFT), which happens to share the same lack of success in smartphones. Together, this underdog couple hopes it can wage war in the smartphone market against the smartphone juggernauts, Apple Inc. (NASDAQ:AAPL) and Google Inc. (NASDAQ:GOOG). On the surface, this partnership gives me the sense that it’s a mutually beneficial arrangement. Nokia benefits from the support of a player with deep pockets like Microsoft, and Microsoft Corporation (NASDAQ:MSFT) benefits from having an experienced OEM in its corner. However, once you dig deeper into the nature of this partnership, you quickly realize that Nokia is getting the short end of the stick.

Page 1 of 2
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The 10 Largest Pharmaceutical Companies In the World

The 10 Most Expensive Android Apps

The 9 Most Expensive Designer Bags in the World

The 7 Most Expensive Real Estate in the World

The 10 Most Expensive eBay Items Ever Sold

The 10 Most Expensive iPhone Apps

The 9 Most Expensive Designer Shoes in the World

The 10 Most Expensive Cigarette Brands

The 10 Most Expensive Law Schools in the US

The 10 Best Wall Street Movies

The 10 Most Expensive Golf Clubs Ever Sold

The 10 Most Expensive Golf Memberships

The 10 Best Disney Characters Ever Created

The 8 Best Foods for Gaining Weight

The 10 Most Expensive Colleges in the World

The 7 Most Memorable Ad Campaigns of All Time

The 7 Most Expensive High Schools in the World

The 10 Electric Vehicles with the Longest Range

The 10 Cities with the Worst Drivers in the World

The 10 Most Expensive Dresses Ever Created

10 Islands to Visit Before You Die

10 Famous Celebrities Who Needed Rehab

The 15 Countries with the Largest Oil Reserves

The 10 Most Overused Excuses in the World

The 5 Best iOS Apps You Can’t Get on Android

5 Companies Damaged By Social Media Blunders

The 10 Most Legendary Blues Songs

The 10 Most Lawless Places in the World

4 Reasons China is a Threat to the US

The 17 Most Sugary Drinks in the World

The 10 Most Ruthless Rulers in History

The 10 Greatest Generals in History

Top 8 Travel Destinations for 2015

The 10 Safest Dog Breeds for Children

The 10 Most Stolen Vehicles in the US

The 7 Most Expensive Celebrity Weddings

The 10 Best LoL Teams in the World

Top 10 Worst Marketing Campaigns Ever Produced

Top 5 Diets that Help You Lose Weight

The 10 Best Ways to Stay Awake

7 Artists That Switched Musical Genres

The 10 Most Expensive Cities to Live in New Jersey

The 10 Best High Schools in New York

The 10 Countries With the Least Gender Inequality

The 6 Biggest Musician-Manager Feuds

The 10 Countries with the Cheapest Gas Prices

The 7 Most Theatrical Bands of All Time

The 8 Worst Band Breakups of All Time

The 10 Most Important South American Leaders

The 7 Most Successful Casting Show Winners

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!