Nokia Soars: Proof of Life, or Time to Take Your Money and Run?

Shares of Finnish telephony legend Nokia  (NYSE: NOK  ) surged more than 23% this morning. The stock is trading at prices not seen since last April, when the then-fresh Lumia 900 smartphone series still seemed like a threat to the established wireless world order.

Nokia plunged over the summer as low-cost Android phones basically destroyed the Lumia's target market. But who cares about summertime sales, when smartphones typically thrive during the holidays? Today's spring-loaded bounce is a market reaction to Nokia finally getting some traction, just in time to greet Christmas shoppers.

NOK Chart

NOK data by YCharts.

The company announced some preliminary holiday-quarter results, and it was generally good news. In particular, Lumia sales of 4.4 million units were "better than expected," in Nokia's own words. Both the handset division and the Nokia Siemens  (NASDAQOTH: SIEGY  ) infrastructure equipment venture will deliver positive operating margins this time. The handset operation clears the break-even point by the slimmest of margins, but that's still better than the 6% negative margin management had predicted.

Still, I think it's a little early to proclaim Nokia's triumphant return to a leadership position. Four million flagship phones sounds like a lot, but that's a worldwide number for the seasonally strong holiday quarter. By comparison, Apple  (NASDAQ: AAPL  ) sold 10 million iPhones through AT&T  (NYSE: T  ) alone, and Google  (NASDAQ: GOOGL  ) activates more than 1.3 million new Android devices every day. There's a lot of heavy lifting left to do, and I'm not at all convinced that Nokia has the muscle to pull it off.

That's why I'm not telling you to back up the truck here. In fact, if you bought Nokia shares at rock-bottom prices in recent months, this looks like a reasonable time to take profit off the table. Share prices have nearly tripled from 52-week lows, after all. Nokia remains a speculative bet at best, even with one not-too-terrible quarter under its belt.

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  • Report this Comment On January 10, 2013, at 12:36 PM, robmxa wrote:

    4.4 million sales in half Q4. Would a full quarter have produced 8.8 million?

    Production snafus or underproduction in Q4, How many 920's could they

    have sold if they had been available? Maybe another 2 million?

    China and India and the Model 620 will all add to first quarter. Add 5 million more??

    As per Christmas sales, Christmas comes in the first quarter in China!

    I can see 15 million Lumia's sold in first quarter maybe more. If so and if they keep that up for the year expect a $20 stock price by Q4.

  • Report this Comment On January 10, 2013, at 12:46 PM, 123688 wrote:

    "Nokia Soars: Proof of Life, or Time to Take Your Money and Run?"

    That is a very weird comment!

    A few weeks ago, Nokia already hit $4.35 when nothing was sure about 4Q. And now Nokia announced profitability, you said something like this?

    For the record, the stock is now only 10 cents more than that "nothing was sure" a few weeks ago.

    If investors of NOK have wanted to take money and run, they would have already taken a few weeks ago!

  • Report this Comment On January 10, 2013, at 12:51 PM, Waseem80 wrote:

    You take your money and run. I will keep my shares and write diagonal calls on my LEAPS. Working great so far!

  • Report this Comment On January 10, 2013, at 1:24 PM, techy46 wrote:

    "Nokia plunged over the summer as low-cost Android phones basically destroyed the Lumia's target market."

    Why don't the Motley Fools as least get the facts right. The Lumia sales were hurt by WP7 devices not being eligible for WP8 upgrades and evrybody waiting for Lumia 920 and 820 WP8 devices. In July all you smart analysts and opinionators where saying Nokia would run out of cash and die. Nokia's going $6-8 PS by this time in 2014 and could even go back to $10-15 PS is MS W8 and WP8 take off like some real smart people think.

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