With the iPhone 5 being just a moderate improvement over the the iPhone 4S, competition looks all set to catch up with Apple. Though the iPhone is now hugely popular among large consumer bases, the trend could change, and consumers could always look to newer and better products, just like how the obsession with the Motorola RAZR died out not too long ago.
Nokia will catch up with Apple, if not outperform it, for a variety of reasons. The Lumia line of products may not really eat into Apple’s iPhone sales, but Nokia’s focus on that line of smartphones represents a focus on the company’s core technology while shedding non-core assets, which over time would make Nokia a better investment option than Apple. Investors may not be evaluating the long term value of the iPhone correctly, especially when you think about how short term a boost Verizon got when they launched the iPhone a few quarters ago.
But Nokia is a large company, one that can be valued at over $13 billion using conservative valuations, which is $3 billion higher than the market value, and this assessment comes with the assumption that Nokia is only breaking even in net income.
Nokia has a huge patent portfolio, riding on a stream of steady payments for patent usage which amounts to around 500 million euros on an annual basis. These patents stretch across all major cellular and mobile communications standards, software and services, hardware and user interfaces and functionalities. The mobile giant owns around 10,000 patent families after investing around 45 billion euros. This makes for a massive portfolio worth around 6 billion euros to another giant like Amazon or Microsoft. Nokia also generates around $600 million in royalty income from its patents annually as well from companies like Apple.
Nokia spent $8.1 billion in 2008 to buy Navteq , a company whose technology is based on user-observed geographic features. It contains millions of Points of Interest (POIs), which makes it easy to locate anything from restaurants to gas stations. Whats more is that Navteq owns 90% market share in car manufacturers industry and companies like Sony, Garmin, Magellan, LG and other PND vendors use it to enable their devices.
Besides, Navteq is a high margin business, with sales growing 50% from last year to around 1 billion euros, while operating loss went down to 225 million, and this can mean only good news for Nokia. The Nokia PureView camera are outstanding technologies, and the future looks bright for Nokia. The software giant has again begun to focus on its patented technologies and will support a higher valuation than the market is assigning the stock.
September 17, 2012 at 7:09 am
Stephen Elop must have paid for this article. Elop is simply ruining Nokia like anything and Finnish investors are looking like jokers for not taking any action against him.
Elop killed a well-selling Symbian and went with his former employer to put whole Nokia as an OEM for Microsoft. And, all investors are looking as not having common-sense, because everybody knows how Android has been doing all these days compared to Windows Phones. Android phones are selling 50 times more than WP phones.
September 17, 2012 at 7:14 am
Nokia itself is claiming that it is improving Windows Phone experience. SO, Microsoft is getting lot of free development done at Nokia for its OS. It is unbelievable that that how stupid Nokia investors are watching it happening. Stephen Elop is always working for Microsoft and never for Nokia. He is using entire Nokia engineers to do Microsoft works and produce junk outdated hardware like Lumia 920.