Nokia Corporation (NOK), the world’s largest mobile phone maker, recently announced the launch of two new handsets, namely Nokia 100 and 101 priced at $30 and $35, respectively, targeting the low-end market.
Nokia 101 is a dual-sim phone with 16GB expandable memory and is slated to be launched in the upcoming quarter of 2011 while Nokia 100 is scheduled to hit the market later this year.
Nokia 101 is expected to cash in on the growing popularity of Nokia’s dual sim handsets in the low-end market and will mark the company’s fifth dual sim phone in the last three month period.
Earlier this year, Nokia took a historic decision to adopt Windows Phone 7 software for all its forthcoming smartphones, thereby sidelining its less user-friendly Symbian operating system.
However, we do not expect any Windows 7-based smartphone before the end of 2011. Moreover, Nokia lacks a high-end smartphone like Google Inc’s (GOOG) user-friendly Android-based smartphones and Apple Inc’s (AAPL) iPhones in its product portfolio and this will likely lead to further market share loss. So, in order to counter competition, Nokia is planning to target the emerging markets of Asia and Latin America with its cheaper dual sim handsets.
We continue to believe that the recent lawsuit settlement with Apple coupled with Windows Phone 7-based smartphones launch and increased demand for dual-sim handsets in the emerging nations will improve Nokia’s outlook going forward.
However, delay in the launch of Windows Phone 7-based smartphones coupled with stiff competition from other smartphone makers will act as negative catalysts for the stock going forward.
We, thus, maintain our long-term Neutral recommendation on Nokia. Currently, Nokia has a Zacks #3 Rank, implying a short-term Hold rating on the stock.
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