Nokia Kills Symbian in the U.S. to Focus on Windows Phone 7
Nokia (NYSE:NOK) has always struggled in the U.S. mobile phone market with rivals Apple (NASDAQ:AAPL), Research in Motion (NASDAQ:RIMM), Samsung and Motorola Mobility (NYSE:MMI) taking up most of the market. Recently, Nokia announced its plans to exit the market and stop selling both featured phones and Symbian-based smartphones. [1] Nokia is now betting on its transition to Microsoft’s (NASDAQ:MSFT) Windows Phone 7 operating system in a desperate attempt to remain a leading smartphone vendor and turnaround its struggling business.
We currently maintain a $6.65 price estimate for Nokia stock, which is about 30% above market price.
This move could help Nokia save costs
We believe that this could be a good move by the company as an exit from the U.S. could help the company save operating expenses for the business that was limping along. According to Comscore, the U.S. smartphone subscriber share for Nokia Symbian declined from 2.3% in March this year to 2% in June this year. [2]
Hence supporting the operations in the U.S. for a declining business that it plans to replace with its Microsoft OS doesn’t make much sense. Another thing to note is that the main motive behind its decision to adopt Microsoft OS was to cut its operating expenses by 1 billion Euros by 2013. (see Nokia’s Recovery in 2012 Supports $6.60 Estimate) Hence this move could just be the beginning of Nokia’s bigger plans to achieve its cost savings target.
See our complete analysis for Nokia
Notes:- Nokia President Chris Weber in an interview with AllThingsD, August 9th, 2011 [↩]
- comScore Reports June 2011 U.S. Mobile Subscriber Market Share, August 4th 2011 [↩]