Did Apple's announcement help Nokia buy time?
Just over one week ago as Nokia took to the stage to announce their new Windows Phone 8 devices, their stock value dropped 16% in a single day upon the news. To many of us, this was confusing if only because the devices themselves really seemed great—but the problem was (and still is) the uncertainty created by not announcing price and availability.
We had an excellent analysis of the situation by our own Chris Umiastowski and noted how this was probably temporary and not warranted.
Since that time, Nokia’s stock has slowly climbed back up but there was another hurdle in the distance: Apple’s iPhone 5 announcement. The anticipation was if Apple announced something truly groundbreaking—revolutionary instead of evolutionary—it would further damage perception of Nokia to investors. The iPhone 5 is already one of the top selling phones in the world and it just got way better? That’s bad if you’re betting on Nokia.
The good news is because expectations were high for Apple—perhaps too high—the company did not exactly ‘wow’ the tech media. Wired nailed it with the headline: “The iPhone 5 Is Completely Amazing and Utterly Boring”.
Sure the iPhone 5 will still sell like gangbusters and Apple will reap the profits. Even their stock is up today about 2% showing investors are confident in yesterday’s announcement.
But two things happened:
- People were talking about the Lumia 920 a lot yesterday. It was often used as the benchmark to measure against the iPhone 5
- A window has opened up, allowing Nokia some breathing room to get these devices out to the masses
Could you imagine had Nokia waited until after the iPhone 5? All of that coverage yesterday would have omitted details of the Lumia 920 and some of its innovative technology. Instead, we have direct comparisons of hardware and design and the normally fawning media is not gushing over the iPhone 5.
Nokia given some breathing room for release?
In turn, it appears that Wall Street may have given Nokia a pass on missing those dates and pricing. A second chance. Sure, investors are still leery of the company and whether they can turn around, but it appears that Nokia may be able to actually deliver a device more impressive than Apple’s (in terms of raw technology).
Personally speaking, we were worried about a stock bloodbath had Apple shown off something truly remarkable--something that company is clearly capable of doing. Remember the "Oh and one more thing..."? Investors sure do. Instead, the opposite happened and people felt good about Nokia. Not great, but there was some confidence.
Will Nokia’s stock continue to climb? It may. We think as Microsoft starts to reveal Windows Phone 8 more, as dates are announced and build up is created it will only help the company. Silence though is deadly.
Make no mistake: execution here is everything. One misstep and people will look at Nokia like RIM. But if they nail it including early dates, powerful OS (with some unrevealed wow factors) and the right price, Nokia can do this yet.
And Nokia’s stock? It’s not really a measure of actual performance or value but it does play an important if illogical role in modern day market capitalism: perception. For that reason during these tenuous times, it’s important to see how it trends. Back in July Nokia hit an all-time low of a $1.63, peaking at $3.25 a few weeks ago and then crashing back down to $2.20 after last week.
Today it closed up 6.91% at $2.94 a share.
Edit: As pointed out in comments, Nokia-Siemens is looking to sell of their business support systems (BSS) for $380 million with positive responses from interested parties. This combined with the partnership with China for the Lumia 920 is all good news, which helped rally the stock.
Related: Apple underwhelms with the iPhone 5. Here's why the Nokia Lumia 920 is better.; App used in the above photo is 'Markets & Me'