Nokia Corporation (ADR) (NOK): Strengthening Its Bid For Third Place

Struggling handset maker Nokia Corporation (ADR) (NYSE:NOK) has been on the receiving end of bears for the past year, with some of them jokingly saying that the Finnish tech bigwig is a synonym for ‘bear’. Personally, I believe that the increased negative outlook on the stock is justified. After all, we are talking about a handset maker that once boasted of a 40% global market share. Now, however, prospects are brightening in view of increased Windows Phone penetration in the U.S. and other developed markets.

A recent study by Kantar World Panel shows that Windows Phone is catching on significantly. As the market focuses on the overblown Android-iOS tussle, Microsoft Corporation’s (NASDAQ:MSFT) Windows Phone continues to penetrate the U.S. and European markets — where its primary hardware partner, Nokia Corporation (ADR) (NYSE:NOK), is based.

Kantar’s study, which relates to the first three months of 2013, suggests very strong growth for Windows Phone in the U.S. In Q1 2013, Windows Phone gained 1.9% compared with the year-ago quarter. This gain translated into 5.6% of U.S. smartphone sales in the first quarter of the year. The real headline in Kantar’s study is not the significant year on year growth, but the rate at which Microsoft Corporation’s (NASDAQ:MSFT)’s Windows Phone has gained over the first three months of the year. In January 2013, Windows Phone accounted for only 3.2% of U.S. smartphone sales. This later grew to 4.1% in February and later to 5.6% that was documented in the quarter ended March.

What does this growth signal for Nokia Corporation (ADR) (NYSE:NOK)? And more importantly, what is the impetus behind the growth, is it a sustainable force? These are the questions that industry specialists are asking.

Strengthening Nokia’s bid for third place

Microsoft’s growth strengthens Nokia Corporation (ADR) (NYSE:NOK)’s bid for third place. Apple Inc. (NASDAQ:AAPL) and Samsung’s tussle has created a key leeway for fringe players like Research In Motion Ltd (NASDAQ:BBRY) and Nokia. So far, Research In Motion Ltd (NASDAQ:BBRY) has made inroads in Canada and Europe. In fact, naysayers were compelled to go on the defensive after it turned surprise profits of $0.22 per share for Q4 2012, beating expectations which were pegged below the break-even point.

In as much as BlackBerry is making significant inroads, its market share in the U.S. does little to vindicate its hard work. If anything, Microsoft’s Windows Phone is gaining at a higher rate than Research In Motion Ltd (NASDAQ:BBRY). Kantar’s research reveals that the latter only accounted for 0.9% of U.S, sales in the quarter ended March. With the odds evidently skewed toward Microsoft Corporation’s (NASDAQ:MSFT)’s operating system, Nokia Corporation (ADR) (NYSE:NOK)’s chances couldn’t be any better.