Could a Hot New Smartphone Lift Nokia’s Stock?

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Finnish mobile phone maker Nokia (NYSE:NOK)  will soon launch its ballyhooed N8 smartphone in the U.S.  Nokia has long been in need of a killer phone for the crowded U.S. and European smartphone market, where it struggles to compete with Apple (NASDAQ:AAPL),  Research in Motion (NASDAQ:RIMM) and Motorola (NYSE:MOT).

Overall we’re bullish on the N8, which features a 12 megapixel camera, the ability to shoot and edit HD videos, and live Facebook feeds. Additionally, the N8 is the first smartphone to run Nokia’s  Symbian 3 mobile operating system, which improves on Symbian 2 in several respects.

If the N8 can help revive Nokia’s fortunes in developed markets, we see a potential 5% upside to our $12.33 price estimate for the company’s stock. Our analysis follows below.

Nokia Losing Ground in the U.S. and Europe

We estimate that developed markets (U.S. and Europe) constitute around 17% of the $12.33 stock price estimate for Nokia. The company’s U.S. and European market share has slid steadily in recent years, from 36% in 2006 to 28% in 2009. We expect this decline to continue, reaching 19% by the end of Trefis forecast period.

But let’s assume that the N8 finds favor with U.S. and European consumers, allowing Nokia to hold its developed market share at 28% between now and 2016. This scenario alone could add 5% to our price estimate.

Symbian 3 launch

The N8 will run Nokia’s Symbian 3 operating system, which includes new features like multi-touch, fast flip scrolling, and free navigation software through Ovi Maps.

Symbian 3 was supposed to launch in the second quarter of 2010. In an earlier article, we argued that an earlier launch of Symbian 3 could have helped Nokia compete more effectively against Apple’s iOS and Google’s (NASDAQ:GOOG) Android OS. But it was not to be. Nokia’s stock has declined from around $12 a share last April to about $10 a share today, likely due in part to the delay in launching the new Symbian based phones.

You can see the complete $12.33 Trefis Price estimate for Nokia’s stock here.

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