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Three Questions Nokia Must Answer on Captial Markets Day


If you like to throw money at a down-and-out name, and least know where it stands.

When I commented about Nokia (NOK) back in October (see Nokia Trying to Emerge from the Dust), I had no idea that it would be re-arranging the deck chairs on the Titanic a few days later with its "management changes." Rick Simonson, the former CFO became the Head of Devices. To the best of my knowledge, Mr. Simonson has never had an operational position, so I'm not certain what this says about the devices group. Timo Ihamuotila, the former Head of Global Sales became the new CFO, and Jo Harlow, the former Head of Global Marketing became the new Head of Smartphones.

With the new team in place, the company will be facing analysts and investors in its annual schmooze-fest known as Capital Markets Day (CMD) in Espoo, Finland, on December 2.

Adding to the curiosity value of CMD is the fact that Nokia marketing head Anssi Vanjoki has apparently let it be known that the company doesn't rule out the possible sale of its handset manufacturing operations as part of its attempt to quickly increase its mobile Internet solutions. Exactly how one facilitates the other is anyone's guess at this point.

I've had a number of people ask me over the last couple of months if it's time to buy this stock. Much of that interest is based upon current low valuation coupled with its industry position and the assumption that it will "rebound." Personally, I wouldn't. But if you're one of those who likes to throw a few bucks at down-and-out names in hopes of hitting a home-run, you have to believe that Nokia's management can answer three questions at CMD.

1. First, as I noted in my earlier comment on the company, it just doesn't seem to "get it" when it comes to smartphones and the entire phenomena. It's been the hot growth market for the last two years and will be for the near-term as well. The company's been up to bat a number of times and has yet to touch the ball. What can it show you on Wednesday that will change its current circumstances from a product and services perspective? Not what it's going to do 12 months down the line, but now.

Nokia has a propensity for trying to define/characterize a market on its terms. Hey, when all you have is a hammer, everything looks like a nail. But you've seen what iPhones (AAPL) can do along with the Pre (PALM), Droid (MOT), Storm (RIMM), et al. What does it have that stacks up now?

2. Second, Nokia's bread and butter is in trouble from my perspective. The basic handset business (now being run by the old CFO) has derived much of its success in recent years from a concentration on emerging markets. Take a quick look at the graph below and you'll see what I mean.

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No positions in stocks mentioned.
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