Created by Rahul MadhuMarch 25th , 2012

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Nokia OYJ ADR [NYSE: NOK]

Presentation Overview• History/Company Overview• Misperception • Thesis Points• Catalyst• Risk• VAR • Recommendation

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History• Founded in 1865 near

Tampere • As wood pulp manufacturer

• 1967 – Nokia Company , Finnish Rubber Works and Finnish Cable Works merged, into the Nokia Corporation.

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History• By 1970s, Nokia began to

focus on networking solutions.

• With the adoption of GSM in Europe, the Company began to focus solely on consumer cellular devices. • Nokian Tyres/Footwear

• By the start of new millennium, the company had corned the mobile cellular market.

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Stock

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Financials

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In USD

Last price $5.42

Market Cap $19.63 b

EPS (TTM) -.41

P/E --

Forward P/E 13.92

2010 Revenue $51.01 b

Yield 3.5 %

P/Sales .4

Beta 1.86

Company Structure:• Nokia

• Mobile Solutions• Mobile Phones• Markets• Subsidiaries

• Navteq [2007]• Nokia Siemens Networks [JV 2007 ]• Vertu

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Misperceptions: Symbian • Many people perceive that Nokia will not be able to

build feature phones, because they are dropping the Symbian platform for the Windows phone OS.• False, Nokia is only dropping S60, but keeping S40 OS for

the feature phones.

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Misperceptions: Symbian

S60Symbian

Used in Developed countries

S40Feature

phone OS

Very Popular in Developing

Countries

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Misperceptions: Smartphones • Many people perceive that feature phones is dying

sector and everyone is willing to switch over to smart phones.• False, Feature phone market is slowly declining and the

distinction between them is almost non-exist.• Number of cellphone companies have withdrawn from this

market

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Misperceptions: Smartphones

• 1 GHz CPU• 3’• 2G/3G• Bluetooth 2.1• 512 mB ram

Sony Ericsson Xperia X10 Mini pro

• 1 GHz CPU• 2.6’• 2G/3G• Bluetooth 2.1• 128 mB ram

Nokia Asha303

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Misperceptions: Hardware • Nokia phones are outdated when compared to its

competitors• False, Nokia’s hardware is similar to LG, Apple.

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Thesis Points

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New Smartphone

Strategy

Strength in Research

and Development

Strong Support

Structure

Thesis Point [1]: • Nokia is rekindling its focus on smartphone segment

by switching over to the Windows Phone.• Integration of Microsoft services

• Xbox Live integration• Nokia Music• Nokia Drive• Zune Pass• Skype • Office Suite

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Thesis Point [1]: • Windows phone 7 has received stellar reviews

about its functionality and its ease of use.

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Cnet “Microsoft should be applauded for thinking outside the box, and for integrating features intelligently into the OS….”

Engadget “Wonder of wonders, miracle of miracles, Windows Phone is developing into the OS we've been asking for since we first used it last year…”

Gizmodo “The Windows Phone interface still feels fresh and new and different and fast, and I'm kind of amazed I'm not tired of it after a year.”

Thesis Point [1]:

Windows phone Mango offers integration to the Microsoft Metro UI Ecosystem

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Thesis Point [2]: • Nokia is a leader in R&D related to mobile

telecommunications• It has close to ~19,000 patents• Number 2 in R&D spending last year in Europe

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Company Sector R&D investment (Euro)

Volkswagen Automobiles 6,258.00 M

Nokia Telecommunications 4,938.00 M

Daimler Automobiles 4,852.00 M

Sanofi-Aventis Pharmaceuticals 4,390.00 M

GlaxoSmithKline Pharmaceuticals 4,378.96 M

Thesis Point [2]: • Nokia outspends most if not all of it competitors.

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Thesis Point [2]: • Compelling Nokia products in

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Thesis Point [3]:

• Nokia prides itself in supporting the cellphone throughout itself useable life.• Nokia Support• Nokia Support Discussion• Nokia Care

• Nokia will continue to support Symbian till 2016.• Nokia Symbian belle update February 8th , 2012

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Thesis Point [3]: 60.0.003 [October, 2011] 51.0.650.0.540.0.531.0.10131.0.00830.0.01121.0.10121.0.02520.0.01211.0.00911.0.00810.4.01610.0.010 [April, 2008]

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Catalyst:• Nokia alliance with Microsoft is a major catalyst

for the growth of Nokia in the future.• Microsoft is aggressively promoting for Windows

phone. [$250 Million]• Microsoft is investing €18 Million in Apps program

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Catalyst:

• Nokia’s new CEO, Stephen Elop is willing to make sweeping changes that will increase Nokia’s profitability.• Moves telecommunication devices production to Asia• Closes non-telecom related services offered by Nokia• Restructures Nokia Siemens by cutting Union Labor 23

Catalyst:• At the moment, the Nokia windows phone is only

available in limited number of markets [10 and counting].• China Nokia lumia 800c (March 27th )• Canada Early April 2012• India Q2 2012

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Risks• Nokia fails to innovate in bringing forth

compelling products.• The cost cutting measure initiated by the

CEO fails to revive the competitiveness of the company.

• Failure to increase the number of App in the windows market place

• Macroeconomic problems

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VAR: T-Mobile • “ Lumia [710] is the second most popular

phone that people are looking to buy. Unfortunately, it is not as popular as the Galaxy s2 phone” – Jonathan

• “In store, we sold about 4 to 5 phones per day in the first couple of weeks of its introduction. The online sales are a lot higher…” – Brian

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VAR: India• “I have the Micromax a70 phone, but the

phone was unreliable. It crashes almost daily, because of the [an]driod OS. I am thinking of getting of the new Asha phone.” ~ Das

• Have you owned Nokia phone before?• “ Yes, my first phone is Nokia 3310. It still

functions after so many years ” ~ Das

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Product Pipeline

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• Windows 8 Tablet Q4 2012

Recommendation • I recommend MII initiate 2.5% long position

before Nokia releases Q1 2012 earnings.• April 19th, 2012

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Questions?

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