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Nokia's Smartphone Success Could Come Back to Haunt Investors

There haven't been many happy moments over the past five years for Finnish smartphone player Nokia (NYSE: NOK  ) . Although Apple and Google have changed the game in the smartphone space since 2007, Nokia has been slowly eyeing a return to relevance with its flagship Lumia line of smartphones. In fact, the company gave investors a bit of a shot in the arm last quarter, when it posted stronger-than-expected Lumia sales in its most recent quarterly report. However, this encouraging number doesn't have everyone impressed. In this video, tech and telecom analyst Andrew Tonner warns investors that booming Lumia sales could contain a hidden bomb.

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  • Report this Comment On August 25, 2013, at 11:05 PM, TheDinger wrote:

    @author: I'd expect better research from Motley Fool, when you publish an article.

    1) Nokia's estimated share of the Windows Phone market is 82%-85%; I did take note that your qualifying claim of 74% was for Windows Phones "in current operation".

    2) More abhorrent was the total lack of facts behind the "bomb" scare that you allude to in Nokia's upcoming 3rd quarter revenues report. Any informed investor or analyst would know that Nokia's low-end Lumia models 520/521 are selling very well, demonstratively outpacing the sales of the high-end 92x series and the Lumia 1020. Lumia sales, in total, will again rise QoQ, but the lower sales price of the Lumia 520/521 models will skew downward the median ASP (average sales price) for all Lumia phone sales reported.

    The worst-case scenario, at the 3rd quarter earnings reporting, is that uninformed people look at the lowered ASP out of context, and conclude that margins are atrocious and that Nokia must be discounting everything in sight to make a sale.

    It is rumored that Nokia produces 20% margin on each of its Lumia models. In the short term, Nokia's strategy appears to be to build up over-all market share via the low-end Lumia models, so to encourage more and more Windows Phone apps development. This would lead, hopefully, to more sales of higher-end Lumia models, and thus higher ASPs and revenues.

  • Report this Comment On August 25, 2013, at 11:58 PM, avj401 wrote:

    This is what I don't get about these google fanboys

    they don't realistically have any facts. All their articles are for sole purpose of generating webclicks, MS and nokia seems to attract an audience like the goog/android fanboys who needs their daily fix by putting down any competing product.

    in Todays mobile platform which has the largest malware , which could do some serious damage , you guessed it 'Andriod' .

    Android Platform has least privacy ever. Every txt , every search is tracked.

    Android moto is 'competitors Innovate , we blindly copy them'.

  • Report this Comment On August 26, 2013, at 3:34 PM, jtbramlett wrote:

    If you do not already know that the ASP will be down significantly, then you have been asleep for the last couple of months.

    The fact that the 520 series is making significant strides in the emerging markets is a sign of the success in what is quickly becoming the fastest growing market. And, it does not take great forecasting skill to project that this will have the impact of lowering the ASP.

    It is all part of a bigger plan.

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