Nokia Launched Windows Phone Extending Stock, Sentiment Rally

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At the Nokia (NYSE:NOK) world event in London this week, Nokia unveiled two smartphones based on Microsoft’s (NASDAQ:MSFT) Windows Phone platform. [1] These devices are branded as “Lumia” that the company hopes will challenge Apple (NASDAQ:AAPL) and Google (NASDAQ:GOOG) in the smartphone market. Nokia also introduced the Asha series with QWERTY keyboards and touchscreens, which Nokia said would “blur the line between smartphones and feature phones.”

Nokia plans to launch these devices in Europe and Asia later this year and in the U.S. early next year. Markets cheered this news and the stock was up by more than 7% in yesterday’s trade and is almost up 30% on the month. Our $7 price estimate for Nokia stock is now about 5% below market price.

See our complete analysis for Nokia stock here

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Nokia optimistic about its strategy

Nokia President and CEO Stephen Elop was exuberant in his speech during the keynote.

He remarked:

Eight months ago, we shared our new strategy and today we are demonstrating clear progress of this strategy in action. We’re driving innovation throughout our entire portfolio, from new smartphone experiences to ever smarter mobile phones. From the Nokia Lumia 800 to the Nokia Asha 201, we are bringing compelling new products to the market faster than ever before. I’m incredibly proud of these new devices – and the people of Nokia who have made this happen. ((ref:1))

Lumia phones have some attractive features

Both of Nokia’s Lumia Windows Phones feature Nokia Drive, a full-fledged personal navigation service with free turn-by-turn navigation and dedicated in-car user interface. They also sport Nokia Music introducing MixRadio, a free global music streaming application with hundreds of channels.

We believe execution in the U.S. will be the key for Nokia as traditionally the company has not been able to meaningfully penetrate that market mainly due to its lack of relationship with carriers. Nokia plans to rectify that anomaly with Windows phones though.

Momentum with Nokia stock continues

Last week Nokia announced better than expected Q3 2011 results, which resulted in a 6% increase in Nokia’s stock. The company got a boost from higher sales of its low-end phones, especially the dual-sim phones.

In our previous note titled Earnings Boost Nokia, But Windows Phone Release Next Week Could Drive Stock Higher, we discussed that Nokia still has a lot to cover up as its position in the more important smartphone segment continues to decline. We also mentioned that the real test for Nokia will begin now, and if the Windows phone strategy is executed well, it could drive the stock higher.

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Notes:
  1. Nokia press release, October 26th, 2011 []