Monday, February 14, 2011

Nokia (NYSE:NOK), Microsoft (NASDAQ:MSFT) Need to Prove Themselves Says Goldman (NYSE:GS)

To say the response to the deal between Nokia (NYSE:NOK) and Microsoft (NASDAQ:MSFT) is mixed would be an understatement, and that includes financial giant Goldman Sachs (NYSE:GS), which said they see the partnership under pressure in the short term, saying it must prove itself through successful execution.

Goldman said, "We believe investors are unlikely to embrace Nokia's bold new strategy until it is shown to be working, as Microsoft’s traction in mobile is unproven. Additionally, investors are likely to worry about a short-term collapse of developer interest in and consumer demand for Symbian based phones, which currently contribute c.50% of Nokia’s devices sales."

That being said, Nokia and Microsoft have nothing to lose if this segment and everything to gain. If they can generate some wins in the near future and gain some traction, this could end up being a very lucrative deal, contrary to the naysayers who look at if from a very narrow view and perspective.

It doesn't mean Microsoft and Nokia will succeed, but if they do it right and are able to approach with a sense of urgency, the partnership could surprise a lot of people.

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