This Is Why I Sold Nokia

"Loser." That's the word that kept coming to mind when I thought of Nokia (NYSE: NOK  ) over the past few months, and that's why I sold my shares 11 days ago.

Some explanation is required here. It's not that I think of Nokia and its people as losers, or its products as shoddy or unimpressive. To the contrary -- I've been mostly happy with the Nokia handsets I've owned over the years. When I think of Nokia as a "loser," I think of it as a loser of:

  1. Market share
  2. Developer share

Nokia has suffered poor financial results as it bleeds its share of the smartphone market to Apple (Nasdaq: AAPL  ) , Research In Motion (Nasdaq: RIMM  ) , Palm (Nasdaq: PALM  ) , and now even Motorola (NYSE: MOT  ) with its new Droid handset. Developers, meanwhile, are racing to create software for the iPhone and Android handsets.

They're smart to do so. A new report from Strategy Analytics suggests that Apple produced $1.6 billion in operating profit from its iPhone division last quarter, easily besting the $1.1 billion Nokia produced over the same period.

Wait, it gets worse. Last night, Gartner released new data that shows Nokia lost three percentage points of smartphone market share worldwide. Not surprisingly, Apple and RIM gained, with Research In Motion adding 4.9 percentage points and Apple 4.2 points.

Either way, Nokia is losing. With lower profits and less market share, and facing tough competitors who have the backing of a very large and very powerful developer community, the mobile king sits atop a threatened throne. You'll have to pardon me if I refuse to wait around for the coup.

But that's my take. Now it's your turn. Is Nokia teetering toward irrelevance? Or, at 13 times projected earnings, is this telecom titan too cheap to ignore? Please vote in the poll below, and then leave us a comment explaining your thinking.

Apple is a Stock Advisor selection. Nokia is an Inside Value pick. Try any of our Foolish newsletter services free for 30 days.

Fool contributor Tim Beyers had stock and options positions in Apple at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. The Motley Fool is also on Twitter as @TheMotleyFool. The Fool's disclosure policy has to hang up now. Bye!


Read/Post Comments (7) | Recommend This Article (5)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On November 13, 2009, at 2:49 PM, Inept wrote:

    Tim, did you consider the fact that Nokia's launching several substantial smartphones this Q as a possible reason for their large, sudden decline in global smartphone market share last Q? They were selling off year-old models when the consumer market was anticipating the release of the N900, the E72 and the X6 all in one quarter.

  • Report this Comment On November 13, 2009, at 2:50 PM, accelerando wrote:

    2015 - share of total global cell phone market -- apple 40, android based phones 40, other 20.

  • Report this Comment On November 13, 2009, at 7:47 PM, Tasm01 wrote:

    Its all too easy to see nokia as a failure in the US because a) it didnt quite buddy up with the operators as much and b) not a rich portfolio of high end devices.

    BUT take a better look at the emerging markets... hmmm, India = Nokia > 60% market share... We may take internet for granted in the west but many people experience internet for the first time through their mobile in such markets... chances are its going to be a nokia, so nokia is in a competitive position to offer the OVI services also to these people (mail,music,maps etc)... At the same time Nokia is taking steps to fixing (a) and (b) above, for example it is now shifting focus to a richer high end device portfolio, take a look at the N900... Well, lots of potential here for Nokia in my view and lots of upside potential for NOK, risk reward ratio definately favours the bulls in my view - Go ahead and short if you feel like loosing money, or invest in Nokia and be a winner with them ;)

  • Report this Comment On November 14, 2009, at 12:46 PM, rajjames wrote:

    Sell AAPL and buy MOT. This is my advice. Wait, don't draw conclusion so fast, I will tell you why I suggest this.

    1. AAPL is $ 200 and say in 2010 it become $600

    2. MOT is $9 and in 2010 it will become $ 30

    Which one will happen first? I believe 2 so buy MOT even if you have to sell AAPL

  • Report this Comment On November 14, 2009, at 8:42 PM, Akiraiaia wrote:

    I grew up in Europe now live in Asia and work with Nokia. While Nokia's share is declining even in Asia incl. India and titans like China mobile have announced to go with non Symbian platforms (but Android instead), I would go for Nokia because they did great in the past and have a relatively loyal customer base... But with some insights into this company, I won't for 3 reasons:

    1. This company has very bad business ethics and management internally is as political and bureaucratic as it can get. They have great ideas but can't execute any of them properly due to internal barriers.

    2. China is the worlds biggest mobile phone market with 660million users. China Mobile (80% share) announced to launch their own platform based on android NOT Symbian. Furthermore, Nokia hardly has any phone models that work with China Mobile's 3G network (wcdma).

    3. Samsung and to some extent LG are greatly growing marketshare in China, India and throughout most of the region at the expense of Nokia's ailing share.

  • Report this Comment On November 15, 2009, at 2:03 AM, hary536 wrote:

    @Akiraiaia,

    It seems you are not a Nokia employee. Else i guess your ethics are even worse than Nokia's business ethics that you described above. (Being an employee, you should rather not rant on a public site like this if incase thats the reality, which i don't think so).

    1) I can agree that sometimes, their business decisions are not too good and their marketing is not as good as it should be, especially in US.

    2) I guess inspite of being a Nokia employee(if its true) you have no knowledge of what is happening in the Symbian ecosystem. Read this:

    http://www.nasdaq.com/aspx/stock-market-news-story.aspx?stor...

    China mobile has expressed support for Symbian foundation, which is encouraging for Symbian.

    3) I agree, lot of people think that Apple and Rim are eating Nokia's share, but most of them completely ignore Samsung and LG, which have eaten more market share of Nokia than others, especially in US. Reason being weaker Nokia ties with US carriers.

    But i think Nokia still has a good future. They may have lost market share now, but they can still regain it back. They(includiing Nokia's CEO) have realized and accepted their mistakes publicly. They have some good products lined up and Booklet 3g is also an extremely solid product. However, they still need to do a lot of work and they know that. Q4 of 2010 will be very important for Nokia as Symbain ^4 will start rolling out for first time in new handsets.

  • Report this Comment On November 15, 2009, at 10:53 PM, waitasec wrote:

    by 2015, there will be no cell phone in the world. People will be using personal computer with superior mobility, to do everything includ mp3, gps, email, phone, camera, fax, game, raido, etc, even watching TV.

    Whoever solve the battery, floding lcd, super lightwight keyboard or revolutionary input device, wins.

    So far there is no winner, yet.

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