NOKIA - Stocks

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Most of the progress and user-friendly technology we see is due to rapid advancement in the field of telecommunication that has allowed people to communicate efficiently and effectively. Apart from the improvement in personal communication, telecommunication has allowed businesses to effectively communicate with their clients and customers and achieve success. Telecommunication holds a key position in numerous sectors of the market, whether it is education, healthcare, transport, technology, and finance.

The world we live in is connected due to seamless telecommunication that has also helped in video conferencing, instant messaging, data usage, web-based communication and interactive television. One of the giants in the field of telecommunication is none other than ‘Nokia’ that from the late 1990s to the first decade from 2000 to 2010 ruled the mobile phone industry.

Nokia is a Finnish technology company that engages in the production, marketing, and distribution of smartphones and other important equipment and software related to telecommunication. The core business of Nokia includes Mobile Phones, Enterprise Solutions, and Technologies and Network.

Nokia is headquartered in Espoo, Finland. The company operates in more than 130 countries in the world and has over 98,300 employees. Nokia posted €23 billion in revenue in 2018. The research and development (R&D) unit of Nokia, known as the ‘Nokia Bell Labs’, is known for its incredible innovation and sophistication in technology.

Nokia runs 15 manufacturing facilities in 9 countries and also manages research facilities in 12 countries. Nokia is known for its popular tagline, which is ‘Connecting People.’ Nokia was ranked 89 in Fortune Global 500 in 2009. From the late 1990s to the end of the 2000s, Nokia had certain dominance in the cellular market due to its superior quality phones as compared to other mobile phone makers.

Nokia has done significant contributions to the development of mobile telephony, GSM network, 3G, 4G, 5G, and LTE networks. During the telecom bubble and its prime success period in 2000, Nokia contributed to 4% of Finland’s Gross Domestic Product (GDP) and almost 21% of total exports from Finland

History of Nokia

Nokia was founded in Finland by Fredrik Idestam in 1865, and initially the company did manufacturing of paper and pulp. In 1898, the Finnish Rubber Works were established. In 1912, the Finnish Cable Works were formed, and in 1915, Nokia’s shares are listed on the Helsinki Stock Exchange.

In 1967, both the Finnish Cable Works and Finnish Rubber Works are merged to form Nokia Corporation. In 1979, the mobile phone company by the name ‘Mobira Oy’ is formed. In 1981, the world’s first international cellular system called ‘Nordic Mobile Telephone Network’ is formed with the support of Nokia. In 1982, Nokia acquired ‘Mobira Oy,’ and later, Nokia Mobile Phones division is formed.

In 1986, Nokia debuted its first international mobile phone, and in 1993, Nokia launches the first digital cellular phone in the market. In 1998, Nokia beat Motorola to become the biggest mobile phone manufacturer in the world. Nokia’s market share in cellular phones increased from 22.5 in 1998 to 26.9% in 1999, and Nokia sold nearly 77 million phones in 2019.

In 2002, Nokia introduced the first 3G mobile phone in the world. On February 11, 2011, Nokia formed a strategic partnership with Microsoft and which said that Nokia would implement Windows Operating System (OS) for all its smartphones. Stephen Elop from Microsoft became Nokia’s CEO (Chief Executive Officer), and the partnership with Microsoft also meant the integration of platforms and services such as Bing search engine and integration of Bing maps into Nokia maps.

In 2011, Nokia launched its flagship, and first windows phone called the ‘Lumia 800,’ but Nokia started to face consecutive losses in sales as the Windows OS did not appeal to consumers all over the world who preferred Android OS offered by the majority of cell phone makers and Apple OS. Nokia suffered huge losses by mid of 2012, and nearly 10,000 employees were downsized due to cost-cutting measures.

In 2013, Nokia sold its mobile and devices unit to Microsoft. In 2014, Nokia launched its first Android device, which was named ‘Nokia X.’ The steep decline of Nokia’s business was quoted to be due to company’s lack of innovation and first depending on its Symbian platform and then going for Windows OS and being late to implement Android OS for its cell phones.

In July 2013, Nokia put a stake in Siemens, which was called Nokia Siemens Network and worth $2.2 billion, and later the subsidiary was called Nokia Solutions and Networks and then named Nokia Networks. In 2014, Nokia signed a deal with China Mobile valued at $970 million. On April 15, 2015, Nokia purchased a French telecommunications company Alcatel Lucent for €15.6 billion. The purpose of the acquisition was to develop 5G technology and compete with Ericsson and Huawei.

On April 26, 2016, Nokia acquired a French health device maker called ‘Withings’ for $191 million. On May 18, 2016, Nokia sold its branded phones division to HMD Global, and in Mobile World Congress in January 2017, Nokia introduced its Nokia 3, and Nokia 5 smartphones, and a reimagined model of its iconic 3310 mobile phones.

On January 19, 2018, Nokia signed a deal with Japan’s NTT Docomo, which is the largest mobile operator in the country for the installation of 5G based radio stations in Japan by 2020. Also, in January 2018, Nokia introduced the ReefShark powered 5G chipsets. In January 2019, the Canadian government announced to invest 40 million Canadian Dollars to help Nokia do more research and development in 5G technology. In March 2020, Nokia acquired Elenion Technologies, which is a US tech firm.

Current Business and Investment of Nokia

Nokia is a global company involved in the design, development and implementation of network infrastructure, technology, and software services. Nokia operates in various segments that are Mobile Phones, Multimedia, Nokia Technologies, Nokia Software, Networks, and Enterprise Solutions.

• The Mobile division looks over the production, marketing of various Nokia mobile devices. The modern-day Nokia has started to offer smartphones that run on the Android OS and includes numerous phones in different series such as Nokia 1, Nokia 2, Nokia 3, Nokia 4, Nokia 5, Nokia 7, and Nokia 8 series.
• Nokia Multimedia unit engages in the selling of cable television set-top boxes, mobile gaming devices, and home satellite systems.
• The Nokia Technologies segment emphasizes on innovation along with research and development (R&D)
• The Nokia Software section deals transmission equipment, wireless switching systems along with cloud computing and other software applications
• The Nokia Networks division manages the different types of networks that include fixed network, mobile networks and services, and optical networks
• Enterprise Solutions overlooks the development of wireless systems that are used in the corporate sector.

Nokia has always been innovative and leader when it comes to technology development. The company has gained massive momentum with 5G technology and secured almost 66 commercial 5G deals with 19 5G live networks. The Nokia 5G technology is powered by ReefShark, and MIMO (Multiple Input Multiple Output) shipments are already underway. The focus of Nokia in 2020 was to secure long term value, generate cash, and do developments in Mobile Access.

value, generate cash, and do developments in Mobile Access.

Risk and Potential in Nokia Environment

Nokia posted a revenue of €23.315 billion in 2019. The operating income of Nokia was €800 million, and net income was €8 million in 2019. The total assets of Nokia in 2019 were €43.857 billion. Nokia’s revenue or net sales in the fourth quarter of 2019 was €6.9 billion, while yearly sales were €23.3 billion. The Earnings per Share (EPS) of Nokia fourth quarter of 2019 was €0.15 per share, while for the year, EPS was €0.22.

SWOT Analysis is a popular management tool that allows business companies to analyze their business efficiency and apply certain plans for future growth and progress. The SWOT analysis of Nokia is given by

• Strengths

Nokia has been a dominant force in the telecommunication industry. The company is 155 years old, which makes it one of the oldest and most successful companies. Nokia was a trusted and reliable brand among consumers. The company has wide reach in all parts of the world with its excellent distribution network. Nokia produces and sells premium quality mobile phones that are user friendly and durable. The resale value of Nokia phones is higher as compared to other mobile phones.

• Weaknesses

Nokia’s main weakness was not realizing the upcoming rapid technological change and sticking on its laurels. The company continued with its Symbian OS and then adopted Windows OS when all the other notable mobile phone brands implemented Android OS and were highly successful. The product quality and after-sales service of Nokia also suffered, and many loyal Nokia fans started to use and own cell phones from other manufacturers such as Apple, Samsung, LG, Sony, and Chinese brands. Nokia was a giant in cell phones but was slow to take the initiative, and then the Android phones the company finally launched did not fare well among the consumers.

• Opportunities

Nokia has the opportunity to develop smartphones with more advanced features and integrate the devices with their 5G technology, which is already a success in most parts of the world. Nokia could expand its portfolio and develop more smart devices in wearable, tablet or notebook market.

• Threats

Nokia faces tough challenges and competition from rival cell phone makers that includes Samsung, Apple, Huawei, Sony, LG, Xiaomi, and others. With increasing competition and rapid technological changes, it has become difficult for Nokia to maintain and expand its business. The low-cost Chinese smartphones are causing more problems as many people in emerging markets are going for phones with cheap prices but which gives them value for money.

Stock Analysis of Nokia

Nokia is listed and actively trades on the New York Stock Exchange (NYSE) with the ticker symbols ‘NOK.’ The company is listed under the ‘Electronic Technology’ Sector, and the industry is ‘Telecommunication Equipment.’ Nokia is also a member of other indices such as the NASDAQ Helsinki Stock Exchange, and Euro Stoxx 50 Stock Market Index.

The all-time high share price of Nokia was $61.88 on June 19, 2000, and the average price in the last 52 weeks is $4.05.

The Coronavirus pandemic has disrupted businesses everywhere since February 2020, and business companies are finding it difficult to sustain and gain profits. Nokia, on the other hand, posted better than expected results in the second quarter financial report. The dividend payout of Nokia to its shareholders was $0.05, and Nokia’s shares surged 11%, and stock value grew 6.3%. The net profit of Nokia was €311 million and increased by 21% in the second quarter. Nokia posted revenue of €5.092 billion with an 11% decrease due to Covid-19.

Nokia expects that the earnings will improve, and EPS will be 0.25 by the middle of the year. However, the Covid-19 outbreak still looms, and its full economic effects are still not evaluated properly, which can make the stock value of Nokia quite volatile. On the other hand the 5G technology potential is helping Nokia to improve its stock value.

The information above is for education purposes only and cannot be considered as investment advice. Past performance is not reliable indicator of future results.