The results of Apple's (Nasdaq: AAPL ) patent infringement victory over Samsung are pretty clear: The largest company in the known universe got bigger and potentially even more powerful. Don't be surprised to see parades in the streets of Apple hometown Cupertino, Calif., coming soon to an iPad near you. But the party in Espoo, Finland -- headquarters of Lumia smartphone maker Nokia (NYSE: NOK ) -- is every bit as justified.
The judicial smack received by Samsung, and possibly by other phones using Google's (Nasdaq: GOOG ) Android OS, is a potential game changer for CEO Stephen Elop and the rest of the Nokia team.
By now, you've likely heard about that $1.05 billion the jury in San Jose, Calif., awarded to Apple, confirming its assertion Samsung infringed on multiple patents owned by the iPhone and iPad behemoth. If you haven't gotten past the headlines just yet, here's a breakdown from Fool analyst Evan Niu.
Even though the two dozen or so Samsung phones sold in the U.S. affected by the ruling aren't a huge portion of the 50 million units it sold in Q2 (the suit was specific to older models), Apple isn't done. New Samsung phones like the popular Galaxy SIII are still in Apple's crosshairs, and a similar ruling pertaining to more recent products would really set the mobile smartphone and tablet market on its ear.
Beyond the obvious -- the $1 billion in cash -- there's also the as-yet-unknown effect on the shape and functionality of Google's Motorola Mobility Nexus 7 tablet, and other products, many of which use the Android OS. Another question analysts and investors are asking, and there's no clear answer as yet, is if other smartphone and tablet makers running the Android OS will need to redesign products going forward.
Another consideration: The notion that Apple expands its objectives beyond hardware design and functionality, and goes after the Android OS itself, isn't beyond the realm of possibility.
All the questions surrounding smartphone and tablet products, and the OS running them, are driving investors to non-Samsung and Android OS providers. The jump in Microsoft (Nasdaq: MSFT ) and Apple share prices are evidence of this. Not to mention the subsequent decline in Google's stock price.
The biggest beneficiary to date -- as measured by stock price appreciation -- is Nokia. Nokia's Lumia smartphone, and a tablet that could be released as early as Q1 of 2013, uses Microsoft's Windows 8 OS. As discussed in a recent article, Nokia shareholders have benefited from a nice run-up of late, even before the recent Apple-induced pop. Now there are even more reasons for Nokia investors to feel (cautiously) optimistic.
Adding fuel to the Nokia fire
The rumors surrounding the release of Nokia's newest Lumia smartphone were the catalyst for much of the gain in stock price this past month. Word has it the Nokia World Event scheduled for Sept. 5 is the time and place for the critical smartphone unveiling. After Nokia's latest jump in share price, Elop needs to deliver to continue Nokia's positive momentum.
There's also the strong balance sheet Nokia boasts with nearly $12 billion in cash, and an 8.2% dividend for yield-hungry investors. Add last quarter's return to operating profitably by its Siemens Networks division, and Nokia shareholders already have several reasons for hope.
It's unrealistic to assume devices running Google's Android OS will somehow become obsolete in the domestic marketplace, or Samsung phones will become non-factors; it's too early for that. But the uncertainty following the Apple/Samsung verdict is enough for investors to consider alternatives, and that includes Nokia's new Lumia smartphone.
And there's more. Once Nokia's exclusive selling arrangement with AT&T expires in a few months, Verizon (NYSE: VZ ) is ready to get on board the Lumia train in what is truly a win-win. For Verizon, the Lumia is a chance to improve margins on its smartphone sales. Apple is able to essentially name its own terms with data carriers, including Verizon, and Verizon hopes offering an alternative will change that.
Though Nokia hasn't come full circle by any means, even analyst sentiment is beginning to shift. The upgrade by analysts at Wunderlich Securities is a positive sign for Nokia shareholders, and more analysts will follow suit if (when) Elop delivers at the Sept. 5 World Event.
The turnaround of Nokia isn't imminent by any means. But thanks to Apple, Samsung, and a jury of their peers, Nokia is once again showing signs of life.
Microsoft stands to benefit from the recent Apple/Samsung ruling, too. But there's a lot more you should be aware of to determine if Microsoft is a buy. This premium report discusses key opportunities and risks facing the technology leader.