Weekly Mobile Notes: Apple, RIM and Nokia

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The past week was good for almost all stocks in the mobile phone industry, as the broader markets were buoyed up by improving global cues. RIM (NASDAQ:RIMM) recovered almost 15% from last week’s lows, followed by Apple (NASDAQ:AAPL) and Nokia (NASDAQ:NOK) posting gains of 5% and 3% respectively. RIMM’s recovery was led by reports of analysts upgrading the stock, signalling a turn in market sentiment. Here are some of the major developments from the past week for the sector.

Research In Motion

Sanford Bernstein upgraded the stock from Underperform to Market Perform while GMP upgraded the stock to Neutral and Morgan Stanley (NYSE:MS) cut EPS estimated but reiterated its Sector Perform rating. While these aren’t exactly ringing endorsements, it seems as though analysts believe that all negative news are largely priced into the stock. These upgrades are mostly valuation calls with the stock trading below its book value of $18.92, according to Bloomberg. [1] At these depressed valuations, RIM may be worth a second look. (see RIM Upgrades Provide Some Relief for the Stock )

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See our complete analysis for RIM stock here


Apple

In a sign of shifting market dynamics, China passed the U.S. as world’s largest smartphone market by volume, according to latest Q3 figures released by Strategy Analytics. Around 24 million smartphones were shipped to operators and retailers in China last quarter as opposed to 23 million units shipped in the U.S. market. China shipments grew by 58% while the U.S. shipments fell by 7% quarter-over-quarter, according to the report. However, U.S. continues to be the largest by revenues, which shows that there is still some distance to go before the Chinese start paying up more for their smartphones.

Apple’s growing presence in the most populous nation of the world, as it increases the number of carriers that sell the iPhone in the U.S. from the current one (China Telecom), should see it make impressive market share gains in the coming years. (see China Passes the U.S as the Largest Smartphone Market; Apple Poised for Huge Gains)

The Kindle Fire also continued to rack up impressive sales, helping Amazon sell four times as many Kindle products Black Friday as the same day last year. Two analysts, who surveyed Apple retail stores ad carrier outlets on Black Friday, sad that the iPad also continues to sell at a breakneck speed and that the demand is more than enough to support their 14 million iPad sales predictions for the quarter. We expect the Fire to continue to sell well due to its very competitive pricing, but fears that it may displace the iPad from its throne sound a little far-fetched at the moment. (see iPad, Kindle Fire Sales Black Friday Show that Apple & Amazon Dominate Tablet Market)

However, Apple’s iPhone 4S may face some challenges, especially in  South Korea, where it was reported that the smartphone hasn’t been selling well due to its hardware related problems, lack of compelling features and the lack of support for Long Term Evolution (LTE) technology. We believe that if a similar trend persists in other Asian countries as well, it could be damaging to Apple’s prospects in the smartphone market. (see Weak iPhone 4S Sales in Korea Shows Challenge for Apple in Asia)

See our complete analysis for Apple stock here

Nokia

After last week’s shock when two analysts  came out with very negative views about the company’s latest Windows Phone-powered smartphones, Deutsche Bank came out saying that they expect the company to meet their 2 million unit sales estimate by the end of this quarter. We believe that until Nokia doesn’t come out with actual sales numbers, such speculation will continue. The company is banking on its Microsoft partnership to prep up sales and a failure to meet expectations with its newly launched Windows phones will be very damaging to the company’s prospects. (see Deutsche Bank Gives Nokia’s Lumia Some Love Lifting Stock)

See our complete analysis for Nokia stock here

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Notes:
  1. RIM as Wounded Puppy¹ Trails Book Value With Faith Fading, Bloomberg []