Nokia Corporation (ADR) (NOK) Is Down…But Not Out

Final thoughts and the sum-of-parts theory

I’m still long on Nokia Corporation (ADR) (NYSE:NOK), because I feel like the value of the sum of its parts aren’t fully recognized at a $12 billion market cap.

If we value Nokia’s NSN stake at $3.5 billion (on the low end of the estimates) and add in Nokia’s $5.9 billion net-cash position, then we get $9.4 billion. This leaves the value of its handset business, the Lumia line, its locational services business, and its 10,000 patents, at just under $3 billion.

I think that’s dramatically underestimating Nokia’s potential. Nokia recently won two patent cases against HTC and makes about $500 million a year in patent licensing. That amount is going to increase over the years as Nokia lawyers up and files lawsuits all over the world.

Nokia’s Lumia business is going to grow at around 30% this quarter, and the company has a reasonable chance to sell 30 million Lumia products in 2013. Nokia’s locational-services business is operating in an industry that is expected to grow to $10.8 billion in 2015, up from $2.8 billion in 2010.

I think Nokia’s ability to cut costs and pursue multiple areas of growth will enable its stock to hit $5 by the end of the year. I’m bullish on Nokia, but more so in the long term. There are plenty of short-term hiccups that could easily happen in 2013.

The article Nokia: Down but Not Out originally appeared on Fool.com.

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