The Finnish mobile phone maker Nokia Corporation (NYSE:NOK) (BIT:NOK1V) is not having a great week. Analysts have downgraded Nokia, in part due to its newly adopted hardware line – Lumia. Moody’s has just lowered Nokia to near junk level. Of course, this would have helped investors before yesterday’s double digit plunge in price.
The shift from its previous own operating software Symbian took place last year after it was a bust. Nokia Corporation (ADR) (NYSE:NOK) is trying to compete Google Inc (NASDAQ:GOOG)’s Android OS used by Samsung Electronics Co., Ltd. (ADR) (LON:BC94), in its smart phones, and Apple Inc. (NASDAQ:AAPL)’s iOS.
UBS AG (USA) (NYSE:UBS) analysts slashed their price from $3.25 per share to $2.50. The stock has hit a 52 week low of $2.30. Nokia is down approximately 70% in 12 months.
Credit Suisse Group AG (ADR) (NYSE:CS) has downgraded the stock from outperform to neutral
Nordea Equity Research cut their rating to “hold” from “buy.”
Analysts from Canaccord Genuity lowered Nokia’s target share price from $3.50 to $2.70 Natixis cut its price target on the stock to 1.5 euros from 2.6 euros
Societe Generale cut its target to 1.6 euros from 1.8 euros.
Analysts are skeptical of Lumia since it is completely untried in the market. Additionally, Nokia will have to discount the price in order for the system to gain traction with customers, operators and retailers. The discount will likely lead to lower loss margins than the company had initially projected.
Nokia has been through rough times over the last two years, including large layoffs. Furthermore, the future is not getting any greener, as the company has already lost the majority of its market share to Samsung Electronics Co., Ltd. (ADR) (LON:BC94).
Nevertheless, Nokia has not shown any signs of giving up. Instead, it has vowed to continue fighting and has now shown keen interest in the smart phones industry, one of the main reasons; it lost its market share to Samsung. The company’s CEO believes that the new, cheap windows software can deliver good results for the company.
The company has a gross revenue of $44.75 billion for the trailing twelve months, compared to Samsung’s KRW173.29T ($147.82 billion), and Apple’s $142.36 billion. Nokia’s profit margin is lower than rivals’; it has a margin of -6.84%, while Samsung and Apple have 8.95% and 27.13% respectively.