Will New Symbian 3 Smartphones in the US Matter for Nokia’s Stock?

March 29th, 2010 by Trefis Team
+2.08%
Upside
4.43
Market
4.52
Trefis
NOK: Nokia logo
NOK
Nokia

Nokia (NYSE:NOK), which competes with Apple (NASDAQ:AAPL) and Research in Motion (NASDAQ:RIMM) in the mobile phone market, is trying to revive its declining US mobile phone business with new smartphones based on Nokia’s Symbian 3 operating system.

The new phones will be released by June 2010 and could lead to a 5% boost in our $25 Trefis price estimate for Nokia’s stock.  The upside to our forecast depends on Nokia’s mobile phone market share in developed markets (like the US) returning to 2005 levels as a result of demand for Symbian 3 phones.

Relevant Articles
  1. Is Nokia Stock A Buy At $4?
  2. Nokia Stock Looks Undervalued At $4
  3. Nokia Stock Poised For Recovery After Dismal Week?
  4. Nokia Stock Looks Set For Rally After Rough Month
  5. Can Nokia Stock Continue Weathering The Storm In The Broader Markets?
  6. Can Nokia Stock Continue Its Post-Earnings Outperformance?

Attracting US Consumers with Features and Pricing

Symbian 3, an improved version of Nokia’s current Symbian operating system, will be targeted at the US market in the next few months.  Symbian 3 phones will have enhanced features like multi-touch, fast flip scrolling and free navigation software that will make the new phones attractive to consumers in the US.

In addition to attracting consumers with advanced features, the new Nokia phones are expected to appeal to price conscious consumers with more attractive pricing than the iPhone or BlackBerry.

Potential 5% Upside to Trefis Price for Nokia

We currently forecast that Nokia’s market share in developed markets (US, Canada, UK, France, Germany, etc.) will decline from 27% in 2009 to 23% by the end of Trefis forecast period due to increasing competition from Apple and RIM.

We estimate that Nokia’s mobile phone business in developed markets constitutes only about 23% of the stock’s value.  In comparison, the mobile phone business in emerging markets accounts for about 70% of Nokia’s value.  The significance of the company’s mobile phones business in emerging markets has a limiting impact on how much Nokia’s stock benefits from improvements in Nokia sales in the US.

By modifying our forecast for Nokia market share above, you can see how there would be a $1.30 (5%) upside to our $25 Trefis price estimate for Nokia’s stock if the company’s market share in developed markets were to return to past levels of around 30% as a result of Nokia’s new Symbian 3 based phones.

For additional analysis and forecasts, here is our complete model for Nokia’s stock.