Nokia Corporation (ADR) (NOK)? No Thanks

Nokia Corporation (ADR) (NYSE:NOK) recently released quarterly results that appear to be positive, but in reality, aren’t that great. I believe that Nokia’s management hasn’t been able to stabilize the company’s overall business and has only managed to cut costs. This is not enough to help the company in a highly competitive environment. While sales of its smartphones continue to lag, investors are continuing to lose confidence.

7.4 million Lumia devices shipped

The company announced that 7.4 million Lumia devices have been shipped in the second quarter, which appears to be positive. However, the company will be facing tougher competition in the second half of 2013, especially with new iPhone and Android devices set to be released. Overall, investors should see the 7.4 million devices as a small positive, but you should also brace for more poor performance.

Nokia Corporation (ADR) (NYSE:NOK)’s ramp up of its latest products (Lumia and Asha) is coming during a tough time. The most anticipated Nokia phone will be equipped with a massive 41 megapixel camera set to go on sale on July 26, (for $300), with a two year contract. One has to wonder how it will fare against new the new iPhone and Galaxy devices, both of which are due out later this year.

Think cash on hand is a reason to buy?

Investors thinking Nokia Corporation (ADR) (NYSE:NOK)’s hefty cash position justifies an investment are better off buying shares in Research In Motion Ltd (NASDAQ:BBRY). According to Yahoo! Inc. (NASDAQ:YHOO), it holds $2.8 billion in cash which equates to $5.48 per share. Research In Motion Ltd (NASDAQ:BBRY) currently has a market cap of around $4.6 billion, which implies, the market is pricing one of the largest private global physical networks, its infrastructure, and patents at a mere $1.8 billion, which seems to be undervalued.

Nokia also faces rising interest costs as rating agency Standard & Poor’s downgraded the company’s senior unsecured debt to B+ from BB-. S&P cited a weakening balance sheet as the reason for a downgrade. The company will now be facing rising interest costs due to the recently lowered debt rating.