Please ensure Javascript is enabled for purposes of website accessibility

Nokia Corporation Pushes the Wireless Envelope

By Tim Brugger - Nov 13, 2015 at 7:00PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The network leader’s technology division continues to explore new, cutting-edge opportunities.

Long-suffering Nokia (NOK 3.25%) shareholders are finally being rewarded for their patience. Up 10% since sharing a host of good news from last quarter, Nokia continues its march toward becoming one of the world's leading mobile networking leaders as the mammoth deal for France-based Alcatel-Lucent draws near.

Nokia has streamlined its business following the sale of units, including its well-respected HERE maps division, presumably to better align itself with its renewed emphasis on networking. But Nokia's technologies group certainly hasn't been sitting idly by. Yes, technologies revenue is a mere drop in the bucket as it relates to Nokia's total sales -- about 5% last quarter -- but CEO Rajeev Suri is taking steps to change that.

Nokia's most recent foray into cutting-edge new technologies could dramatically change the mobile landscape and position its technologies division as a great deal more than an afterthought.

The cusp of innovation
Much of the 7% year-over-year growth Nokia enjoyed from its technologies unit in Q3 was thanks to its strong licensing and patent portfolio: Some analysts have valued it as high as $11 billion. But Nokia's patent portfolio is only part of its technologies unit; the other part is developing new solutions to meet tomorrow's needs.

The latest foray into the unknown for Nokia involves testing what industry pundits have coined "pCell" technology. The concept behind pCell is that it actually utilizes mobile connectivity interference to "synthesize a tiny personal cell (a 'pCell') for each wireless device."

The real-world applications of a pCell-enabled world are virtually limitless. Consider walking through a crowded, downtown metropolis where literally millions of mobile device users are demanding their share of spectrum (wireless signals). Or, perhaps you're one of the 100,000 other fans at the college football game, all checking other scores online via their smartphones. The problem is that there's only so much spectrum to go around, particularly in tight spots, which creates interference.

But Steve Perlman, CEO of privately held Artemis, which developed the new pCell technology, thinks he can use all of that jumbled spectrum to boost reception speeds as much as 50 times faster than "traditional" 4G networks. The problem is, pCell has only worked in the lab, but that's about to change now that Nokia's entered the picture. Plans are to align with mobile carriers to begin testing the potential game-changing technology in the next few months.

Widespread testing of pCell functionality is Nokia's latest venture, but hardly the only one coming out of its technologies group. In late summer, Nokia announced that it has developed the first "commercially available virtual reality (VR) camera," called OZO. The new VR camera is extremely high-end, built specifically for professionals, and is just the first of a portfolio of upcoming media solutions from Nokia.

Earlier this month, Nokia said it became the first non-Chinese partner of China Mobile's (CHL) research institute -- the region's largest mobile carrier -- to jointly develop the next level of spectrum: 5G. The arrangement calls for Nokia to assist in research, developing 5G infrastructure and testing, among other assistance.

Other news of note
The 5G development arrangement with China Mobile was the second bit of intriguing news involving the mobile provider. Just days before the 5G arrangement was announced, Nokia said it inked a $1 billion deal with China Mobile to supply "traditional" 4G networking products and services.

Nokia's growing presence in China, along with news that the $1 billion in cost reductions expected from the Alcatel-Lucent acquisition will occur a year sooner than originally thought, played key roles in Nokia's recent stock price resurgence. As was Nokia's decision to return an estimated $4.3 billion to shareholders via a regular dividend, a special dividend, and the institution of a $1.6 billion, two-year buyback initiative.

There's no shortage of news -- most of it good -- coming from the Nokia camp as of late. Sure, its technologies unit may get lost in the shuffle with so many changes afoot, but as its latest testing of widespread pCell usage demonstrates, Nokia has more irons in the fire than some pundits give it credit for, which should be music to the ears of investors.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Nokia Corporation Stock Quote
Nokia Corporation
$5.09 (3.25%) $0.16
China Mobile Limited Stock Quote
China Mobile Limited

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/27/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.