UPDATE: Analyst Says to Short Nokia (NOK), But is the Call Too Late?

August 29, 2012 1:08 PM EDT
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(Updated - August 29, 2012 1:09 PM EDT)

Nokia (NYSE: NOK) is pressured Monday because nobody is going to want a Windows Phone.

So says Bernstein analyst Pierre Ferragu.

Ferragu says the 100 percent move higher in Nokia's shares since second-quarter results doesn't reflect an improvement in fundamentals. In fact, Ferragu suggested to start shorting the stock.

Further, Ferragu thinks some pressure on Android from the Apple victory over Samsung doesn't necessarily mean that the masses will flock to Microsoft (Nasdaq: MSFT) Windows Phone (WP) offerings. He notes that the firm has done years of research and, despite some positive reviews and hardware of Windows-based smartphones, the operating system still boasts less than 5 percent of the overall market.

Ferragu did go on to say that much of the adaptation of Google's (Nasdaq: GOOG) Android and Apple's (Nasdaq: AAPL) iOS stemmed from a strong ecosystem. "Given the strength of Android and Apple today in consumers’ minds and the scale of both ecosystems, it is unrealistic to believe anything short of a true product revolution, like the iPhone was in its time, could instill life into an alternative platform...if operators and manufacturers are dying for an alternative ecosystem to emerge, all efforts to support Windows and other alternatives have fallen short because of these ecosystem dynamics," he noted.

Some strong points are made by Ferragu in his assessment. WP devices have been struggling over the last few years (though Windows had mobile OS share with the Motorola Q in the mid-2000's, as well as other popular, non-RAZR devices that used Windows CE). It may have been the design of the OS or lack of integration with Windows earlier or simply Google giving Android away for free and Apple's awesome iPhone revolution.

However, others might note that Microsoft's next OS is going to be more mobile-device oriented. Much of the reason Nokia has been suffering over the last few months is the fact that current Windows Phone 7-based devices won't be able to upgrade to Windows Phone 8. Why buy a smartphone now if it will be obsolete in a few months?

So, while Ferragu has some key points, it may be too early to judge the outcome of Nokia quite yet. Shares are 6.1 percent lower Wednesday afternoon.

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I'm buying Nokia :)
Lulu on 2012-08-29 13:50:48
Mark as Spam | Reply to this comment

This crazy analyst "Pierre Ferragu" knows nothing, he just want people to short Nokia, so later on this crazy guy can buy Nokia shares at low price. I'm sorry, I don't have good words for this guy.

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