Nokia Corporation Will Move Forward with China Products - ValueWalk Premium
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Nokia Corporation Will Move Forward with China Products

Nokia Corporation Will Move Forward with China Products

After last week’s grim news of jobs cuts and an operating loss warning, Nokia Corporation (BIT: NOK1V) (AMS:NOKA) (NYSE:NOK)  said on Wednesday it will forge ahead with plans for new China products.

Olivier Puech, president of Nokia’s Asia Pacific operations, said via MarketWatch, “The company has made a decision to continue investing heavily in Asia in terms of product development. We will not compromise our commitment to China.”

Puesch made the remarks at the Mobile Asia Expo, a large trade show for the mobile industry that is currently happening in Shanghai.

But rewind to last week as the company said its operating loss would be worse than expected and by the end of 2013, job cuts could affect 10,000 workers from the company’s mobile handset division.

Opportunities in China?

Nokia’s handset business is not without challenges in China, where competition is growing from an evolving smart phone marketplace.  The rise of Chinese companies providing affordable handsets is adding to an increase in local smartphone users, but it is also making the environment tougher, reported MarketWatch.

So what will it take for Nokia to succeed? Puech believes it will come with the company’s development of handsets and applications from Microsoft Corp.’s  (NASDAQ:MSFT) Windows Phone and Windows 8 operating systems.

He added that Nokia’s new Lumia smart phones running Windows Phone software have garnered positive reviews in China with sales meeting company expectations.

In addition, Chinese applications for the Windows Phone system has increased for the ones created by local developers.

Puesch said, “We believe that there is room for a third ecosystem” along with those centered around Apple’s iOS (NASDAQ:AAPL) and Google Inc.’s (NASDAQ:GOOG) Android.

Nokia Receives Neutral Rating

Meanwhile, besides Puesch’s optimism, on Wednesday, Zack’s Investment Research upgraded their recommendation on Nokia Corp. to “Neutral” based on its low current valuation; it dropped 66 percent in 2011. Analysts wrote that an additional stock decline is unlikely.

The report also noted the company’s transition phase from its Symbian software-based mobile phones to their new Windows-based  smartphones and tablets. The greatest concern for the company to see losses will come from its smartphone segment.

While its Lumia smartphones are seen as an improvement for Nokia, it may not take away marketshare from either Apple’s iPhone or Google Inc.’s Android-based smartphones. Its continued loss of global market share will hurt profitability.

Furthermore, Zacks is still skeptical about the potential for a successful Nokia- Microsoft Corporation (NASDAQ:MSFT) mobile venture. The three major credit rating agencies aren’t so positive either as they have downgraded Nokia to junk status with a negative outlook.

Zacks still gave a neutral rating. Hey, no pressure on either the China or Microsoft products.


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