Nokia Corporation (ADR) (NYSE:NOK) is one of the most widely recognized brands in the world. The company was once the biggest name in the mobile phone market thanks to its strong product portfolio. Through innovation and a strong research and development team, the company became a trend setter in the market. However, after the launch of the iPhone by Apple Inc. (NASDAQ:AAPL) in 2007, the company started losing its market share. People started to move towards the new trendy smartphones, and the company lost the majority of its customers.
After the slump, the company had to take a hard look at its position and change its strategy to reach the top again. Changes in strategy have helped the company, and it has started to regain its market share. Fourth quarter smartphone sales have given the market a positive surprise, and the stock is up 19%.
The company will report fourth quarter earnings on Jan. 24. However, a sneak peak was given into the sales figures. Net sales for the fourth quarter in devices and services were about 3.9 billion Euros ($5.09 billion). Nokia Corporation (ADR) (NYSE:NOK) sold a total of 86.3 million devices. Smartphones accounted for 6.6 million units, of which 4.4 million were the Windows-based Lumia handsets. This is hugely encouraging news for the company. New CEO Stephen Elop has been trying to increase the sales of Nokia smartphones with the Windows-based operating system, as his company is trying to get the best out of its partnership with Microsoft Corporation (NASDAQ:MSFT).
It has taken the company two years to show any signs of a turnaround. Sales for Nokia have been falling for the past five years. However, fourth quarter sales figures are encouraging for the company, and it would like this trend to continue. The turnaround has taken a little longer than expected, but it looks like the sleeping giant is finally waking up. Asia is one of the biggest markets for Nokia, and currently the Lumia line is giving some serious competition to HTC in China. Nokia Corporation (ADR) (NYSE:NOK) has a massive and loyal customer base in Asia, and people love its hardware. Recently, the company has also launched its Lumia handsets in India, another major market for Nokia. I expect the company to get substantial market share in the Indian smartphone market as well. The handsets are priced attractively, and it should be affordable for major portions of the market.
Not Everything is Rosy
Although the company has given a positive surprise regarding its sales, not everything is rosy at Nokia. Most importantly, the financial position of the company has deteriorated substantially, and Nokia Corporation (ADR) (NYSE:NOK) is following a costly strategy to turn the company around. As a result, the cash balances of the company are deteriorating. Nokia’s cash balances were €3.6 billion ($4.77 billion) at the end of the third quarter, down from €7 billion ($9.28 billion) at the end of 2010. If the cash balances keep deteriorating at the current pace, the company can face considerable problems in the future.