Seeking Alpha: Nokia undervalued stock, “Nokia’s is a steal at the current price and has a great future ahead of itself.”
Seeking Alpha has been looking at a few reasons why Nokia is currently a very undervalued stock, concluding that
“ Nokia’s is a steal at the current price and has a great future ahead of itself.”
http://seekingalpha.com/article/641771-nokia-it-is-time-to-buy-this-severely-undervalued-stock?
Seeking Alpha has been mulling over this subject for a while now over several recent articles, from not recommending, to unsure to now recommending Nokia.
Speaking on Value:
Nokia’s current value is mind-boggling. It is one of the most undervalued stocks I have ever seen. Nokia’s share price peaked at $40 in 2007 before declining to just $2.63. Part of this has come from Nokia truly losing value, however, most of it has come from consumer idiocy. Consumers have got too attracted to Apple and Google and have ignored smaller but better deals. Nokia’s current market capitalization is just $9.77 billion. It is worth more than $10 billion just from its share of the mobile market, in fact is worth significantly more if judged on a similar standard to Apple. On top of this, Nokia has compelling fundamentals, a solid cash flow, and an attractive balance sheet. Its metrics are a very attractive picture for potential investors. Its price/sales ratio 0.20. This is incredible as a company which is much worse off, the ailing company Research In Motion, trades at a price/sales of 0.27. Nokia’s price/book is at just 0.66.
http://seekingalpha.com/article/641771-nokia-it-is-time-to-buy-this-severely-undervalued-stock?
Other factors include:
- Rich patent portfolio
- Potential Lumia 900 success
- Potential Windows 8 success
- Debt not an issue
Risks are noted, but Nokia’s value should apparently be higher even prior to Nokia doing anything with Windows 8.
The competition is tough and getting tougher. Should Nokia complete the turn around, Nokia’s stock is expected to increase rapidly. Right now it is the risk of the investors whether they believe Nokia stock truly is undervalued and Nokia’s future products can catch on.
I’m biased, but I see Nokia has a great future ahead of itself. There are more things going on at Nokia than Windows based products. S40 Full touch is just one example of that.
The first couple of quarters might not suggest that is the case but big, key things might be seen in the second half of 2012.
Source: seekingalpha
Category: Nokia, Windows Phone
About the Author (Author Profile)
Hey, thanks for reading my post. My name is Jay and I'm a medical student at the University of Manchester. When I can, I blog here at mynokiablog.com and tweet now and again @jaymontano. We also have a twitter and facebook accounts @mynokiablog and Facebook.com/mynokiablog. Check out the tips, guides and rules for commenting >>click<< Contact us at tips(@)mynokiablog.com or email me directly on jay[at]mynokiablog.comSubscribe
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I agree, I’m defenetely buying… but Jay – why are you holding back on the other info you got from Finland? I meen I’m sertain that you have a bank full of new knowledge, right? Please give us something, soon! I’m waiting for t h e bomb
I’ve not had time to write up – schedule has been so busy. There’s not much for me to say anyway, as you know, usual responses of ‘can’t talk about future stuff’ etc.
I’ll be going over the interviews that I managed to get an audio recording from (the app i used was buggy on the day and did not record, so ended up using video face down). The body language was interesting to say the least for some of the answers and reading in between the lines can reveal/speculate a lot.
I like that they were very responsive to feedback, particularly on the marketing front. I’ll write it up ASAP. Feeling rather ill atm due to lack of sleep. Though I did just take a nap but still feel ill. It may have been the reindeer sandwich this morning :p
Nah, reindeer sandwiches are awesome, it’s the jet lag
Forget the reindeer, we need some scoops!
Get better Jay, I’d love to hear about W8 and Meltemi.
Jay,
Take your time to digest it all & summarise it all correctly.
Don’t worry about those whining impatiently…
Take a few more days off to get stronger if you need to!
Haha, oh man…
Nokia is done kids, they are too late and they didn’t adapt, now they are DONE!
Symbian – DEAD
MeeGo – KILLED
S40 – Knowing Nokia, this will be killed soon too.
WP7 – LOL…
Eldar?
forget about Eldar the always anti nokia/microsoft kid hahaha
Symbian-released source code to public domain. Developments in Symbian will live on in other OS. Still not officially dead, and still has support.
MeetGo-again, development here move on to new OS. Still has current support.
The New S40- Likely will take on all APIs and development of both MeeGo and Symbian, full Qt support. The potential here is fantastic and Nokia is on the right track. Can’t wait to see the upper market models to come.
There is no source code for S^3 and later versions of Symbian as Nokia retracted the Symbian Foundation stance when they’ve acquired them.
MeeGo/Harmattan has also some crucial parts as closed-source, what’s more Nokia didn’t even bother to release sources for Maemo 5, a long discontinued parent of MeeGo Harmattan so I can’t imagine them releasing sources for it either.
That makes both, Symbian and MeeGo/Harmattan essentially dependent on Nokia, and since Nokia is all set to kill them without giving them a fair chance, the community won’t be able to do much. Both are not truly dead, yet, but it’s evident that Nokia, for whatever mind-boggling reason, wants them dead even more than their most fierce competition. Such is the way of Microsoft, err, Nokia – embrace, extend, extinguish…
I have a sad feeling Nokia really doesn’t give a sh*t about open source.
Why did they spend years preparing Symbian^3 under an open source license at the Symbian Foundation, only to relicense it under a proprietary license when they closed down the foundation. If they were really serious about open source, they could have released the full Maemo and Symbian sources way back in 2009.
All this was before the MS partnership and before Elop took over. I still think that until recently, Nokia did not understand software, and it took a hammering by iOS and Android to show them what consumers really wanted with their devices.
No big company, apart from IBM and some other dependent on (F)OSS technologies, gives a sh*t about open-source. That’s the sad fact of life. Computer engineers easily recognize the benefits, but how can you explain to a manager or a bean counter that they should pay their own stuff to advance a technology which everybody, including their most fierce competition can use? You can go on hours and hours explaining how in the mid-term and long-run it pays off immensely, you can explain that it will save their precious dollars, you can show them research that consumers generally consider such companies as do-good ones even if they fleece them… At the end of the day, all they see is `but we’re paying people to help our competition`.
Sure, I can bet that even in Microsoft – a self-declared enemy of (F)OSS – there are guys lobbying for open-source, but I’m not sure it’s a general stance of any company, even those heavily dependent on (F)OSS like Google or Apple. In Nokia, those times have passed with Vanjoki and the people around him – they were pushed out, and what little of (F)OSS friendliness existed within Nokia is now almost completely extinguished.
But the fact remains that Nokia at least at some point in time, even for ulterior motives, did support (F)OSS quite heavily. Today a completely different wind blows through Nokia, and expecting them to give us at least the sources for their abandoned devices is quite unreal.
Indeed. These big corporates suing each other over all this “intellectual property” nonsense makes open source look risky. Apple and Google and Android licensees seem to pay lip service to the concept of open source… open for them to use but closed to the end consumer.
Then again, look at OSS stalwarts like Red Hat. They’ve worked damn hard to become the largest Linux services provider, and they’ve got Fortune 500 companies and the US government as clients. Ubuntu is also making a big impact on the desktop market.
I guess open source (I prefer the term free software, free as in libre) in corporations runs up against a lot of inertia. The bean counters, legal department, old-school IT hands, they’re all familiar with proprietary stuff. Sharing your software for the good of all is a hard concept for them to understand.
One of the strange things about the whole Symbian open source saga is how little remains of the project after Nokia abandoned it, even though the Symbian^2 source code is available under the EPL.
I would have expected at least some people to set up a SourceForce project or similar trying to build and fix a Symbian port for old hardware, backport some apps etc. based on the last public code. There is http://sourceforge.net/projects/symbiandump/ – but this is just a source dump, not a sign of anyone doing the slightest bit of development on the code.
But in terms of the echo it generated in the FOSS community, compared to the size of the code, the project seems to be virtually invisible (as far as I can tell).
I keep wondering whether this means that effectively any Open Source project that is not closely connected to the Linux mainstream is essentially pointless.
Somewhere in this tale must be lurking a case study about the “dos” and “don’ts” of open sourcing, waiting to be written…
Did the Symbian source dump include code on bootloaders? I don’t know if just the source was enough to really allow open source Symbian devices… would have been nice for N8 owners to be able to load another OS.
I think open sourcing Symbian in 2010 came too late to make a difference. Android with its Java-like language and Linux internals were a lot more familiar to developers than Symbian C++, and the devices were also much easier to hack and tinker with, so why bother with Symbian?
Ack, WebOS too… nice UI, a Linux kernel underneath, but it ran on too few devices to make a difference.
There’s a Phoenix Project trying to turn the open source WebOS into something viable again. Hopefully they can get enough developers and interested hardware manufacturers to get started. Nothing better than open source software *and* hardware
How come MeeGo is dead? I am using it daily and it seems to work even better than my iPad
Yeah, so now we even get the argument that people are just too much mesmerized by iPhone and Android and can’t appreciate the hidden beauty of WP.
I wonder what the analyst think will happen when WP8 fails. Nokia will wait two years for another potential * success?
And what if you’re wrong? Will you come here and admit it?
Of course you won’t.
I can’t think of better argument for investment advice than “but in case I’m right you people wont admit it!”
Fingers crossed!
Well let’s hope so. Fingers X’d. All of what they say is valid the but them main opacity for near term horizon is speed of uptake of WP. Here’s hoping they can support and retain most of what’s left of current base (and not p*ss them away) and that WP8 really does have something revolutionary to show us (actually desktop to phone integration could be pretty awesome but actually need to see something real and delivered).
!!!WARNING PEOPLE!!!
Seeking Alpha is a site where individuals contribute their own, personal opinions and analysis of stocks. This is merely the opinion of an individual who is wholly unaccountable. There is no vetting of quality, accuracy or of the person’s qualifications and there is no information concerning this person’s track record. Note that his profile indicates that he’s a finance student. How much experience does he have? A couple of years?
Treat this piece like you would treat a stock tip you found on a napkin at a bar: critically. In particular, be very careful to ensure that you’re not falling victim to a confirmation bias (agreeing with things you want/like to hear).
Nokia appears to be have a very compelling price on all sorts of valuation metrics, but the fact is that a business in decline can appear to be a huge steal until the very day it goes belly up. This is commonly called a value trap and it’s very hard to distinguish from a real value based on a few metrics and ratios alone.
The real distinguishing characteristic here is that Nokia’s moat – it’s defensible competitive advantage – has been smashed to pieces by vastly more competent and better capitalized competition in almost no time at all. A company that was once thought to have a pristine brand, an unassailable balance sheet and almost insurmountable competitive advantages has been laid to waste in startling fashion. It’s hard for a company with no moat to be a value.
I happen to agree that you can make some money on Nokia at this point, but it is an astonishingly risky proposition. I also don’t think it involves a turnaround, but rather a more likely buyout or piecemeal sale of assets. My personal position in Nokia comes in the form of a rather defensive synthetic long (short put contracts and long call contracts).
Again, I would caution you to (a) view this SA piece critically and (b) approach investment opportunities in Nokia with extreme caution.
@Inept Didn’t want to be the first to say it but….. True Dat it’s amateur land/ stock puffinville.
There was quite an interesting piece on Mindful Money about 3-4weeks ago from a Schroeder fund manager saying Nokia looked cheap but outlook was too complicated for him to analyse and therefore he’d parked it on the “Too Difficult” pile.
“A company that was once thought to have a pristine brand, an unassailable balance sheet and almost insurmountable competitive advantages has been laid to waste in startling fashion.”
And mostly by Nokia itself. Lately and most severely by Elop and the board that enabled him.
inept
Good write up, I agree with your points. For my position also Nokia’s greatest problem now is Apple and Samsung have become giants. Nokia really only has one card to play, whereas they are not just sitting with a full hand but a full pack each.
Nokia has a 120,000+ staff and no profit, they may turn this around, but the pain is still to be felt, they will need to lose a huge amount of staff unfortunately.
The share price I think is still too high esp considering the risk involved.
IF and its a big IF, they can actually produce a handset that is better that Apples AND Samsung’s latest, then they might just have a chance, they need to regain their crown that they lost in 2007.
Every and All effort should be pushing Nokia to do this and fire everyone who disagrees.
Nokia’s stock isn’t really a value; it’s more like a value trap.
You really want to play ‘catch the falling knife’ with a company’s share price that has lost over half its value over the last couple of years? Be my guest.
It’s worse than that. Nokia has lost 3/4 of its value in just 16 months. Elop has burnt 75% of Nokia’s value in little over a year! That has to be some kind of world record.
“The first couple of quarters might not suggest that is the case but big, key things might be seen in the second half of 2012.”
What “big, key things” are you talking about? There’s nothing that could make Nokia profitable in 2012. No WP7 phone will do that. That OS is just one big failure. The only possibility is, that people start seriously buying the 808 because of its camera, making it a huge success. But Nokia is not even pushing it, unlike they’ve done with the failed WP, so I find that outcome very improbable.
jay just came back from finland, maybe he knows something we don’t ?
but even if thats not the case, big things are about to happen with ms, and nokia is its primary partner,
WP7 alone, perhaps no. But Nokia hasn’t made only WP7 devices.
Potential Lumia 900 success
Potential Windows 8 success<7quote
There is also big potential in penguins to fly, but not gone happen.
http://www.youtube.com/watch?v=9dfWzp7rYR4
lolol oh well…:p
The Lumia 900 is at least being consistent on the US Amazon charts. You can deny that all you wish.
As for Windows 8, well you cannot say it’s not going to happen – only that you wish it not to because you hate it. I cannot say either that it WILL be a success, only that there is potential for it. Looking at all the new exciting products and devices for Windows 8, it might have a decent chance.
BBC documentaries rocks.
I don’t deny Lumia 900 for being consistent in US.
They give free headphones with it, constantly brainwashing with advertising, and the deals are really nice. People would be fools not to buy it.
Two days ago one dude wanted to buy new phone, and he asked about Lumia 800, i told him to check N9. He then answered that with Lumia he get really nice deal, and with N9 there is no deal. Same in my country, i had to pay full price for my phone… :/ But no regrets here, it is really nice device.
About Windos 8:
I was thinking to upgrade. But there is nothing new. Metro style is just not usable for power users.
Other new stuff is more RAM usage. :/ Maybe tablets will be nice, but after i saw this one: http://makeplaylive.com/ i don’t want that either.
BTW, did you ask them(NOKIA dudes) why they kill they own product? Today i just spoken with some of my colegues, they don’t understand why NOKIA destroy one more OS which was theirs.
Maybe you should ask the same Nokia dudes why they couldn’t get any of the Symbian roadmap updates out in time. S^3? Late by a year at least and totally outclassed on release in late 2010. Belle? About the same.
It’s a helluva thing to keep working on something for years and when it’s finally released, you see the competition has moved far ahead.
Seems to me in Australia, Lumia sales customers have been gained at the expense of lost Symbian Sales Customers.. So no overall gain at all that i can see.
Time will tell, but doing the rounds in my area, only Telstra Stores had the 800 on active display.. All other stores had SGS3 and HTCX on active display. The SGS3 is really selling well as is HTCX.. No sign of 900 as yet, but supposedly hitting Optus stores soon.
lolol penguins
all my free money is in nokia,
of all the stocks that i follow, i believe NOK has the best potential for a very large price swing,
having said that, all stock exchanges are nothing more than casinos,
but at least when u buy shares in companies, ur bet stays on the table.
I’ve been thinking to buy up myself. Just haven’t had a chance to shuffle my account to be able to trade on the international market
Mmmh, shouldnt the potential investments be in MS, rather than Nokia?
+1
best comment here.
MS will be profiting serious dough if little Nokia manages to push WP. Long term investors realize MS will be gaining more then Nokia hence the plunge in NOK shares.The upcoming s40 touchscreen demo does show potential but not enough revenues expected to make a big impact.
Putting money in NOK for short term gains sounds reasonable. But for long term investments, NOK’s BOD and CEO gives out bad vibes.
msft has a very stable trading band, somewhat “boring”, its price wont jump up by any multiples whats so ever,
but nok has been extremely volatile in price, its price has a great chance of increasing by several multiples, and it could do it relatively fast,
Go ahead with your Nok investment. You could turn out rich going against the general investment sentiments. I understand the feeling of cheap stocks have a better chance of doubling in value.
For many, Nokia is a bad long term investment. Nokia’s software revenue potential is a big negative because it’s going the MS route. Nokia’s hardware advantage only is on the camera(pureview) and casing(durability+beauty), all other hardware aspects are at a disadvantage to apple, samsung etc.
The new s40 announcement is positive but not much revenues can be obtained unless QT gets more breathing space to create revenues thru a good ecosystem.
All investments are subjective, so WP fans get ready to place your bets.
qt, s40, etc etc have nothing to do with the share price,
the markets work on rummer and opportunity,
facts dont matter when it comes to greed,
its the way stock exchanges work,
dosnt matter how good or bad a company is, all that matter is how much the traders can manipulate the price,
they make money when the price falls, and again when it rebounds,
traders love to play with a volatile stock,
Hey jey,you are coming from finland nokia house ,what happens ..?what about meltmi any resource? Is it Beautiful ?QT integration? Will it comes during interview with asha team ?
I LOLed at this news.
Really Nokia has wonderful future… All Lock companies are looking at selling them more locks to shut down the factories.
If it is so brilliant, go Jay buy some shares… And for god’s sake stop giving tips on shares when you have little or no knowledge of it!
Of course you did. That’s because you’re a nasty, bitter, spoiled little child.
Wah! They didn’t do what I wanted! Wah! Wah! Wah!
You think buying shares is kids game? Grow up !!!
Well judging by the recent financial collapse I’d say that, yes, it actually is.
Share buying is gambling. That’s all it ever has and ever will be.
Nokia is right now the perfect candidate for a takeover with it ridiculous undervaluation & its patents\assets. Most of the investor firms may be thinking of Nokia in this sense..
Given how Elop effectively removes all non-IP operations from Nokia (and even some IP-related things, but still not on a large scale) – anyone interested in takeover will wait for Elop to cut down Nokia as much as possible before buying them. Nobody is interested in Nokia for their factories or retail channels, it’s mostly the IP that is still of some worth in Nokia.
The moment Elop starts selling the IP as well, and that moment will come with the current trajectory and the fact that Elop exhibits a classical gamblers behavior, you can expect quite a number of companies trying to take them over.
I don’t think Elop is such a big fool to sell Nokia’s IP. He has until now only lend others to use it for “monetizing”. The owner for those patents are still Nokia. I remember reading somewhere that Nokia patents which are worth having( excluding the ones which are necessary for standards – these need to be shared for FRAND purposes) is only worth $2B or so.. Its more of Nokia’s assets like Navteq and NSN among other assets which are more worthy. Selling under-utilized factories with high maintenance is usually done for cost-cutting.
And I agree that many companies\investor firms\hedge funds are waiting for Nokia like vultures..
I hope the day when Nokia would have to sell IPs doesn’t come at all..
Meego was the natural successor to Windows and iOS.
Powerful, efficient, safer, ubiquitous and open source. It could run on phones, tablets, laptops, desktops and even cars.
With QT, it was write once run everywhere. Literally.
Developers would have fallen over each other to support it. All users would have benefited.
It would have been the end of the iron fist rule of Microsoft and Apple overnight.
This is the reason for the covert take over of Nokia by Microsoft. Nothing more. Nothing less.
Nokia means nothing to Microsoft now as the destruction is complete. It is just a matter of disassembling Nokia piecemeal and assimilating the useful parts.
A most elegant demonstration of the power and effectiveness of extend, embrace and extinguish.
Bravo Balmer!
As for Nokia, its curtains.
Here’s why the curtains coming down faster than what most people think:
seekingalpha.com/article/676361-turning-negative-on-nokia-again