In contrast to negative remarks this morning on Nokia (NOK) by Oppenheimer & Co.’s Ittai Kidron, who cut the stock to Underperform, Credit Suisse’s Kulbinder Garcha thinks the company made some “meaningful” announcements yesterday at the Mobile World Congress in Barcelona, Spain, which should help the company “start delivering on improving fundamentals and operational results as we move from Q1 ’12 onwards.”
Garcha, who has an Outperform rating on Nokia shares and a �6 price target, thinks that Nokia can ship 30 million to 100 million phones this year and next based on Microsoft’s (MSFT) “Windows Phone” software by setting up models that span the gamut of prices, from the low-end “Lumia 610” model to the high-end “Lumia 900,” the latter of which is set to debut in the U.S. at AT&T (T) in March.
The new Lumia 610 launched at MWC boasts a decent feature set, as it is a GSM/HSPA device with a 3.7 inch screen and uses only 256 MB of RAM. With support for 800MHz processor and 8GB of memory. The device is expected to be available in Q212 and it is priced at Eu189, however we believe the price point to the carrier will closer to Eu125 meaning that it has been priced for adoption and at the lower end of the Android market. This is now the fourth Nokia device launched since October and as shown the portfolio now spans from price points to the carrier from Eu125 to Eu325, which we represents a rapid product cycle developing from the company with aggressive pricing to drive adoption.
Nokia’s refresh of its “Asha” line of feature phones, moreover, could help revive the company’s mobile phone business, especially the “302″ model at �95.
The company’s “808 PureView” camera phone, with a whopping 41 megapixels of sensor capacity, won’t help sales of the older “Symbian” operating system.
But it’s a kind of preview, Garcha thinks, of how Nokia will be able to differentiate the Lumia line of Windows phones in time.
In short, the company will make a recovery this year with Microsoft’s help. And Garcha observes some positive details regarding the Nokia-Microsoft collaboration:
There is further evidence of the ecosystem around Windows developing. We note that the Lumia 710 and 800 are already available in 31 markets on more than 50 operators. In addition, the number of applications being submitted to the Windows Phone platform is at a rate which is three times the level from exactly one year ago and passed 65,000 applications recently. Nokia also announced that the Windows market place has now launched in 28 countries as well as a beta version of the Skype application that is available as of today. Overall, while this is still someway behind Android and iOS, we do believe that the ecosystems around Windows continues to develop at a decent clip. Nokia highlighted that the Nokia current have 4 sites where R&D is conducted for its smartphone operations; San Diego, two in Europe and one in China. The company highlighted a continuing ongoing dialogue with specific planning meetings as the Windows platforms is developed and has recently added teams in Seattle. We continue to believe the combination of tight cooperation,, advantageous economic terms (give $1bn in annual platform payments) means that Nokia remains advantaged within the windows community.
Crucial to the recovery in financials at Nokia’s Devices & Services division (which includes phones) this year, thinks Garcha, will be both sales of Lumia taking off, but also further operating expense reduction “from �5.35bn in 2010 by more than �1bn by 2013.”
Devices & Services revenue will probably fall 11% this year to about �21 billion before rebounding to �28 billion in 2013, Garcha estimates.
Nokia’s ordinary shares traded in Helsinki are down 1% today at �4.02. The company’s American Depository Receipts this morning are down 2 cents, or 0.4%, at $5.41.
No comments:
Post a Comment