Nokia Corp (ADR) (NOK) Stock’s New Smartphone Lineup Won’t Help It

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Looking for a reason to get behind, or get into, Nokia Corp (ADR) (NYSE:NOK)? It has not been easy to do for a while. Although sales and earnings have been somewhat on the mend since 2013’s implosion, there’s a reason analysts have been less than excited about the potential of Nokia stock of late.

Nokia Corp (ADR) (NOK) Stock's New Smartphone Lineup Won't Help It

Yet, the once-iconic company has managed to make a little more noise than usual of late following news that it was (more or less) getting back into the handset business.

Its first re-entry into the market was the 150, unveiled late last month, but that feature phone was only a taste of what was to come. The Android-running Nokia 6 was announced a couple of weeks ago, and glimpses of what most believe is the higher-end Nokia 8 have already prompted educated guesses about that phone’s specs. They’re impressive … impressive enough to suggest that maybe, just maybe, NOK stock could be worth owning again.

Don’t confuse a new product for new hope though. This company has a mountain-sized hurdle in front of it, and it’s going to take a considerable miracle to get over it.

All Eyes on the Nokia 8

Giving credit where it’s due, it was TheStreet.com’s Mariko Iwasaki who may have put it best with her recent headline “Nokia’s Smartphone Comeback Well-Timed, but Could Be Last Chance.”

Her assessment primarily focused in the prospects of the Nokia 6, which will only be available in China, where it will be competing head-to-head with a rising number of value-oriented smartphone makers. But, the idea applies broadly as well; if the Nokia 6 fizzles in China (it hasn’t yet, but we’ll see) and the Nokia 8 is lethargic on its more global stage, investors may panic.

The 8 does have some compelling things going for it … probably. Take all the presumed specifications with a grain of salt; nobody’s sliced open the Nokia 8 yet.

On the flipside, the pros making these observations are usually on target. And they say the higher-end version utilizes a SnapDragon 835 processor, offers 6 GB of RAM, and accommodates 64 GB or 128 GB of storage. It will also offer microSD card support, and sports a 24 megapixel camera with image stabilization. Some think the 8 also includes a heart rate monitor.

Unfortunately for fans and followers of Nokia stock, a solid bang-for-your-buck device isn’t what sells smartphones in most of the world.

Not Hopeful for NOK Stock

Were it a blind taste-test, the Nokia 6 or the Nokia 8 — or whatever phone has the word ‘Nokia’ on it in the future — might well make a splash with consumers. That’s not quite how shoppers select a device, though.

Here’s a key unquantifiable and unverifiable reality, for better or worse: Most (though not all) consumers don’t entirely care about or even understand the technical specs or features of smartphones. They buy a phone as a means of mirroring the decisions of their peer groups, or because they’re familiar with an established brand name.

Yes, despite the pushback from fans who say the devices are technical marvels, the iPhone from Apple Inc. (NASDAQ:AAPL) is the top status symbol within the smartphone market. A small army of observers have made cogent arguments as to why.

And yes, Samsung Electronics Co (OTCMKTS:SSNLF) is the default go-to brand name. The anecdotal evidence? Even after Samsung issued a recall (and then outright cancellation) of the Galaxy Note7 due to a fire risk, most owners opted to hold onto them, and after the debacle’s dust-settled, 86% of consumers said they’d still buy a Samsung device.

That kind of loyalty to an established brand is going to make it real tough for the Nokia 8 to crack any market.

Bottom Line for Nokia Stock

Nokia still has a networking division, and is wading deeper into virtual reality and healthcare-tech waters. Those are solid business, and will keep money flowing.

Health and networking aren’t growth industries though, and both are fiercely competitive. Virtual reality’s best days are still ahead of it, but that too is already a crowded field, and Nokia is well behind the leaders there.

That leaves phones as a growth driver, but smartphones aren’t going to make a meaningful dent in the company’s top and bottom line … the wall is simply too high. If that was the only reason you were interested Nokia stock, move along.

As of this writing, James Brumley did not hold a position in any of the aforementioned securities.

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Article printed from InvestorPlace Media, https://investorplace.com/2017/01/nokia-corp-adr-nok-stock-save/.

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