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Nokia (NOK) Pins High Hopes on Strong Holiday Sales...And So Do Investors

October 12, 2012 11:31 AM EDT
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Price: $3.54 -1.67%

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    20 Buy, 17 Hold, 6 Sell

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    Up: 13 | Down: 11 | New: 11
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Heading into the holiday sales season, one consumer electronics company that will be looking for a strong bounce and will need it more than most others is Nokia (NYSE: NOK).

Next week, Nokia (NYSE: NOK) is expected to report results for third-quarter 2012 sales and income. For the most part, things don't look good; smartphone sales should be lower while average selling prices and margins are expected to take a hit as promotions to move product reduce profitability. Analysts see an operating loss of €320 million in Nokia's handset unit and €780 million loss on a group level.

In a few weeks, Nokia's new Lumia 820/920 line, which is powered by Microsoft's (Nasdaq: MSFT) Windows Phont 8, will begin selling. The Lumia 920 will be carried exclusively by AT&T (NYSE: T) to start, but its largely expected the Verizon (NYSE: VZ) will pick up the device in short order.

Competition is fierce this year, with Apple's (Nasdaq: AAPL) iPhone 5 and Samsung's Galaxy SIII recording hot sales.

But, Nokia still has a lot to offer and even a modest sales showing in the quarter could lift investors' spirits. One analyst thinks that half-decent sales from October through December and retention of 5 percent of the global smartphone market makes Nokia an attractive stock at current levels.

Comments from Nokia CEO Stephen Elop during the company's quarterly call will be anticipated. Not much divergence is expected from recent comments, but analysts might ask about distribution strategy and marketing for the company in terms of the new device. Other key areas a feature phone market share and how plans to bolster its presence in emerging markets are coming along.

One area that Nokia has recently shined in is the mobile mapping application segment. Following trouble at Apple with its map app in recent weeks, Nokia has aimed to position itself as a viable alternative. In addition, Nokia's maps unit has also inked deals with larger automakers in Europe, like Daimler's Mercedes and BMW, reinforcing the strength in the segment. For more, click here.

Should Nokia's market push in the holidays fail to take hold, the company might find itself looking at implementing a new strategy early next year and CEO Elop might find himself back on the job market.

Shares of Nokia are down 0.6 percent Friday.


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