Nokia's Dec. 5 announcement of its partnership with China Mobile, one of the world's largest wireless operators, is big. Really, really big. Not surprisingly, Nokia's (NOK -0.81%) stock price popped, and the new deal is sure to dominate the day's headlines, as it should.
As impressive as the China Mobile agreement is, the bigger picture for Nokia investors goes beyond today's news. Why? Because the opportunity in China is but one in a long line of positives coming out of Nokia's Finland HQ. It's the abundance of good tidings, and a touch of the ever-present market gossip, that should really have Nokia fans feeling giddy today.
The latest, greatest news from Nokia
With more than 700 million subscribers, China Mobile is the largest wireless carrier in the world's most populous market. The deal will provide China Mobile's users with Nokia's made-for-China Lumia 920T, the first TD-SCDMA compliant smartphone in the country. According to Nokia's press release, it will retail for about $740 without a license. Pretty steep, but there's no word on what, if any, subsidies China Mobile will absorb.
Even as early indications of solid Lumia 920 sales abound -- recent sales results at both Amazon.com and telecom partner, AT&T have been positive -- Nokia announced the introduction of its lowest-priced Lumia yet, the 620 . At an estimated $249, without subsidies, the Lumia 620 is the least expensive smartphone running Microsoft's (MSFT 0.37%) Windows 8 OS. Nokia's press release describes the 620 as an alternative that "offers a more fun, youthful appeal, and compact design." The new phone will first ship to Asia, Africa, Europe, and the Middle East in January, before rolling out to other markets.
The Lumia 620 comes on the heels of the already well-received Asha mid-market phones, with a dedicated Facebook button to access users' favorite social-media site. Like the Lumia 920, early indications are that Nokia has another successful launch on its hands.
More recent news includes the improvements Nokia is making to its industry-leading 3-D maps app, using technologies gained from its recent Earthmine acquisition. Apple's (AAPL 1.27%) iPhone 5 smartphone buyers know firsthand how important a good maps tool is when rolling out a new phone.
Not be overlooked are the announcements involving the sale of its Nokia Siemens fiber-optic unit to Marlin Equity Partners, along with the sale/leaseback of its Finland headquarters, netting about $222 million. CEO Stephen Elop continues to stay true to his vision: streamline operations and divest Nokia of non-core assets to focus on its primary objective -- selling smartphones.
Nokia followers know one of the primary assets it boasts is the strength of its patent portfolio; it's already generating $650 million annually and has an estimated value of $6 billion. The recent lawsuit against Research In Motion (BB -0.69%) claiming patent infringement could be very profitable for Nokia, adding to its patent portfolio value. Will a loss in the courtroom crush RIM's efforts to reinvigorate its own sales, with BB10 on the horizon? Not likely, but it will make Nokia an even more attractive growth and income investment alternative.
Challenges remain
Industry-leading Apple, Google (GOOGL 0.55%), with its Nexus smartphone selling a million units a month, and Samsung together make for a crowded smartphone marketplace full of heavyweights. Throw in a Microsoft-manufactured smartphone that, when it arrives, should surprise absolutely no one, and the challenges to Nokia are pretty clear.
You start tossing industry names like those around, and it's not hard to see why a lot of Nokia bears remain. But that's all right. For Nokia shareholders, naysayers have been part of the scenery for well over a year now, and they're not about to disappear anytime soon. But just as the challenges Nokia faces haven't changed, neither have the many upsides that make Nokia worth considering for your portfolio.
Nokia still carries about $12 billion in cash on the books, pays shareholders a 7% dividend, and is clearly making strides toward Elop's objectives. The recent analyst upgrade from RBC, from a target price of $3 to $4 a share, is nice, but pales in comparison with the other successes Nokia's enjoyed of late.
