Nokia Corporation (ADR) (NOK): The Quiet Killer?

Nokia Corporation (ADR) (NYSE:NOK), the czar of cellphone industry a decade ago, is now struggling to find its way back to the top. They released their latest quarterly report which did not meet expectations. The result was quite visible, as the share price dipped around 13% following the results.

Nokia Corporation (ADR) (NYSE:NOK)

The worse than expected results can be attributed to the decline in the sales of its entry-level phone, Asha, which fell 46%. The decrease has not just been in volume, but also in average selling prices, which is a real cause of concern. Though, the good news is that they have managed to sell 5.6 million Lumia phones, an increase of 27% over the previous quarter.

What led to the downfall of Nokia Corporation (ADR) (NYSE:NOK) couple of years ago was that it failed to notice the changing dynamics of the tech world, and was reluctant to shift from the age old ‘Symbian’ to a more advanced mobile operating system. The result was obvious and visible to all. This rattled Nokia’s base and the stock dropped 70% over the last two years. Almost everyone lost hope of its survival. However, Nokia Corporation (ADR) (NYSE:NOK) bounced back with its new series of windows phone, the Lumia series.

Lumia devices today are one of the best in terms of its hardware, and are counted among the best smartphones available in the market, especially the Lumia 920. This, along with Microsoft Corporation (NASDAQ:MSFT)’s Windows 8, provides a unique factor to attract customers. This has helped Nokia Corporation (ADR) (NYSE:NOK) in regaining its market share, though by a very small percentage.

Apple Inc. (NASDAQ:AAPL), on the other hand, has a lot to worry about. They are slowly losing their grip on the smartphone industry. The latest iPhone was not as appealing as expected and the same old look and feel of the user interface was a disappointment for many. This is one of the reasons why Apple Inc. (NASDAQ:AAPL)’s share price has dipped by around 35% in the last six months.

In the first quarter of 2013, Apple posted revenue of $43.6 billion and net quarterly profit of $9.5 billion, or $10.09 per diluted share. If we analyze this report closely, we will observe that this boost in revenue can be primarily attributed to the growing sales of the iPad and the iPad mini. Most importantly, iPhone sales showed a flat curve year-on-year. This is something that has been a constant worry factor for Apple Inc. (NASDAQ:AAPL) with the growing competition from Nokia Corporation (ADR) (NYSE:NOK) and Samsung.

Samsung, along with the help of Google Inc (NASDAQ:GOOG)’s Android, has become the dominant player in the smartphone industry. They have a simple strategy to be a part of all the sectors, be it the high margin low volume phones or the low margin high volume category. This has been driven by the popularity of Android and its various applications.

Google Inc (NASDAQ:GOOG) introduced the new flavor of Jelly Bean, Android 4.2, few days back which introduces a completely new camera experience and other features. Google Inc (NASDAQ:GOOG) has been constantly upgrading its operating system, providing updates and tweaks to live up to the expectation of the fast moving tech world.

Why do I call Nokia a silent killer?

Nokia Corporation (ADR) (NYSE:NOK) has played it very smart if we look at its strategy in the last one year. They first introduced Asha phones to capture the emerging markets where they were losing their grip because of Samsung and other small players. This also ensured that they do not run out of business and there is a constant inflow of money.