Tuesday, April 19, 2011

Nokia's (NOK) Basic Phones Key to Short-Term Results

Nokia (NYSE:NOK) and Microsoft (NASDAQ:MSFT) have received a lot of attention from the deal to use Windows Phone 7 as the platform of choice for its smartphones, but the financial health of Nokia over the next several years will probably be determined by its ability to continue to compete strongly in the low-end mobile phone market.

Fighting a battle on these two fronts is what Nokia faces, although the real battle is in its basic phones as far as giving the company the time it needs to make the transition to its higher-end offerings, which will take time.

So while the attention of shareholders has been on the longer term strategy of Nokia, the reality is in the short term they must maintain solid results in the low end market in order to have a chance in the high end. That will be the Nokia story over the next several years.

With the combination of cost cuts and increased investment, Goldman Sachs (NYSE:GS) sees Nokia as a turn-around opportunity. Only time will tell if that's an accurate assessment.

Nokia was trading at $8.31, falling $0.09, or 1.07 percent, as of 1:58 PM EDT.

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