Finland’s Nokia has always been a powerful figure in the mobile phone industry, but analysts have observed that dipping smartphone sales have resulted in its position in the worldwide market slipping from #3 to #7. While analysts have stated that Nokia’s decline was expected, many are curious to know where their investments with Nokia stand as of the coming year.
By the third quarter, Nokia sold 82.3 million units, ranking higher than the relatively miniscule 23.55 million units sold by Apple but falling short of industry leader Samsung’s 97.95 million units. These figures greatly surpassed analysts’ estimations and much of this is attributed to Nokia’s very successful Asha line. While Apple, RIM’s Blackberry 10 and overall sales leader Samsung targeted higher-end smartphone users, Nokia’s Asha line, pegged at a price range starting from $99, maintained its crosshairs on mid-range users.
Mobile phone sales worldwide have seen a drop of nearly 3%, while smartphone sales have leapt a whopping 47% in the third quarter compared to the same quarter in 2011. Analysts have determined that this is not necessarily bad news. With RIM’s at #3 in the global market and sales of iPhones and Samsung’s Galaxy spiking, Nokia needs to be patient before the Lumia series picks up speed. Gartner Research predicts that Nokia’s market share slide will soon begin to abate.
However, there are many factors at play against Nokia’s plans of reversing its downslide. One of these is serious competition by Microsoft and Google. Google has seen immense payoffs with its industry-leading Android OS and following its purchase of Motorola Mobility, has entered the competitive world of smartphone production. Apart from this, Microsoft’s release of the Surface tablet has also raised suspicions of a new smartphone in the pipeline, despite CEO Steve Ballmer’s refusal to speak of Microsoft’s plans for the future. This, coupled with Google’s formidable Nexus 4 will certainly prove to be challenging for Nokia.
There are, however, elements working in Nokia’s favour starting with its attractive dividend yield of 9.1%. While Nokia’s profit margins may be dwindling each passing year, its balance sheet remains strong. Additionally, the Lumia series has at least two full quarters before its success in the market can be properly judged and shareholders can expect considerably higher dividends in 2013 if the Lumia series proves to be a success. While it’s too early to tell, Nokia shareholders have solid reasons to keep their investments where they are.
