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Nokia Finally Moves to Android

Posted on Wednesday, Apr 9th 2014

According to a recent Gartner report, worldwide mobile phone sales excluding the smartphone segment grew 3.5% last year to 1.8 billion units. During the fourth quarter of 2013, mobile phone sales grew 3.9% to 490.3 million units. Samsung remains the market leader with a 24.6% market share and 444.4 million units in 2013 compared with 384.6 million units a year ago. Nokia is a distant second player with 250.8 million units sold in 2013. However, Nokia’s phone sales have fallen significantly from 333.9 million units reported in 2012.

Nokia’s Financials
Nokia’s (NYSE: NOK) fourth quarter revenues fell 21% over the year to $4.71 billion, falling significantly short of the Street’s projections of $6.98 billion. However, EPS of $0.10 was better than the market’s expected EPS of $0.06 for the quarter.

By segment, revenues from devices and services segment fell 22% to $4.21 billion. Revenues from HERE mapping service fell 9% to $344.2 million and from their advanced technology segment fell 20% to $164 million.

During the quarter, Nokia’s top-of-the-line Lumia smartphone sales doubled to 8.2 million units. But the growth was not impressive as phone sales recorded a 7% decline over the previous quarter’s 8.8 million units.

Nokia ended the year with revenues falling 17% to $17.5 billion.

Nokia and Microsoft
Last September, Nokia sold their Phone division to Microsoft for $7.5 billion. But the transaction is taking some time to be completed. The companies had expected the merger to be completed by the end of the first quarter. While the European and American regulators have given their go-ahead, the Asian regulators are taking their time, causing the delay. The merger is now expected to be completed this month.

As they wait for the merger, Nokia continued to release new phones. As part of the Lumia series, they released three new Lumia phones – the high-end Lumia 930 and two low-cost Lumia 630 and 635. Nokia Lumia 920 is priced at $599 and features a 5-inch full HD display, 20-megapixel Pureview camera, a 2.2 GHz CPU, 2GB RAM, LTE support, and 32GB built-in storage. Lumia 630 and 635 have 4.5 inch screens, 5-megapixel rear cameras and 1.2 GHz CPUs. The LTE connectivity-based Lumia 635 is priced at $189 and will target the European, Russian, and other emerging markets. The Lumia 630 is priced at $159 and will focus on the US market.

Nokia X Line on Android
As part of the low-cost phone focus, Nokia recently announced the release of the Nokia X line, which includes the Nokia X, the Nokia X+ and the Nokia XL priced at $122, $135, and $150, respectively. The phones are built on Android OS, use a 1-gigahertz Qualcomm Snapdragon Dual Core processor, and will be able to use apps such as Microsoft OneDrive cloud storage, Nokia MixRadio, and Skype, which were available only through Nokia and Microsoft.

Nokia X and X+ feature a 4-inch screen and a 3-megapixel camera. The two phones differ in their memory capabilities. The X comes with 512 megabytes of RAM and the Nokia X+ comes with 768 megabytes of RAM and a 4-gigabyte MicroSD card. The Nokia XL, meanwhile, has a 5-inch screen, 768 megabytes of RAM, a 4-gigabyte MicroSD card, and a 5-megapixel camera.

Earlier this month, they announced the release of the X-series in mainland China in hopes that it will help them capture the fast-paced Chinese market, which now accounts for nearly 40% of the world’s smartphone market. The X-phone already saw 7 million registrations in the country – how many of those registrations turn into actual phone sales still remains to be seen.

Analysts are uncertain of how Microsoft will handle the X-line once the acquisition is completed. Some believe that they may like to retain the line given the possibility of it gaining importance in the Chinese market.

Nokia’s partnership with Juniper
Meanwhile, the market was abuzz with news that Nokia was evaluating a potential merger of the $13.7 billion worth Juniper Networks. The merger was expected to help strengthen Nokia’s Solution and Networks division business in the US. However, Nokia has denied an acquisition for now and is, instead, focusing on expanding their existing partnership with Juniper to grow their US networking market.

Their stock is trading at $7.22 with a market capitalization of $26.80 billion. It touched a 52-week high of $8.20 earlier this year.

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