Nokia is a classic illusion

The once-dominant mobile player may look tempting at less than $5 a share, but speculation in the troubled company has not been profitable.

By Jim Cramer Apr 12, 2012 8:33AM

the streetWhy do so many people want to speculate in Nokia (NOK)? I find this phenomenon of believing that a low-dollar stock could represent great value to be one of the classic illusions of the investing game.

 

Put simply, Nokia is a deeply troubled company. It has restructured repeatedly. It has told us repeatedly that this iteration or that iteration of the smartphone is going to make a big difference.

 

Nothing has made a big difference.

 

Now, I don't want to be binary here. On "Squawk on the Street" I alluded to shooting Nokia like a tired horse. But that doesn't mean Nokia can't bleed ever so slightly on a relatively constant basis. Nokia may not be going out of business. But perhaps it needs to continue to go down as it bleeds share to others. Think something like Sprint Nextel (S) more than something like Eastman Kodak. Think something like Research In Motion (RIMM), not something like Nortel.

 

Remember, though, that this is a $16 billion company and ask yourself if it were to do a reverse 10-for-1 split whether you would want to own it.

 

Related Articles

What's going on with Nokia? I think it is a victim of what has emerged as a two-horse race between Samsung and Apple (AAPL). It's awfully hard to crack back into the lineup, particularly when there is no ecosystem similar to what Apple offers.

 

It is the ecosystem I keep coming back to, the universal nature of interlocking Apple pieces. It's so powerful, and I think it is going to get even more powerful if Apple develops an iTV you can speak to, or speak to a remote iPad, and it puts on what you want. You say "Mute the ads" and it mutes them. Can you imagine? Not that those of us in TV ever want that to come to pass.

 

What does Nokia have to fight against that? A Microsoft (MSFT) operating system that's linked to Windows 8 in some form that is irrelevant to the user? (Microsoft owns and publishes Top Stocks, an MSN Money site.)

 

Worse, Nokia suggested on its conference call that the Chinese operators are adopting a U.S.-carrier-style subsidy approach to new sign-ups. That bodes particularly badly for Nokia, because its phones are cheap, and there's no need to subsidize them, but there is a very big need to subsidize Apple's more expensive handsets.

 

To me, trying to bottom-fish in Nokia makes little sense. Ask all of the other people who have tried. They have nothing, nothing at all, to show for it. Right now, the name Nokia still stands for a company. I fear that one day soon it will stand, again, for the river it is named after. A sorry state of affairs indeed.

 


Jim Cramer is a co-founder of TheStreet and contributes daily market commentary to the financial news network's sites. Follow his trades for Action Alerts PLUS, which Cramer co-manages as a charitable trust, and is long AAPL.

37Comments
Apr 13, 2012 2:39AM
avatar
One major piece of customer loyalty is not to be overseen. Nokia has made a major emotional impact on a lot of young people in emerging markets who want "a Nokia" and see the company successful so they can retain the image of the past as having the best mobile phone supplied by Nokia. This give Nokia  an important potential in emerging markets. We have seen customer loyalty  smother away in developed markets. That can happen in emerging markets too if Apple and Android get traction there. For now they still have a chance to keeping momentum.
Apr 12, 2012 5:57PM
avatar
It wasn't too many years ago that Nokia and Blackberry were the only cell phones worth having. Shows you what can happen when you rest on your laurels. The same thing has happened over and over again - Polaroid, Xerox, Pan Am, Sony - just to name a few.  Look out, Apple.
Apr 12, 2012 5:05PM
Apr 12, 2012 5:00PM
avatar
It sucks because they used to make the best phones, I loved them.  I'm going to blame AT&T.
Apr 12, 2012 4:40PM
avatar
Nokia is in serious trouble? 
Ummmm........wasn't this news like 5 years ago?
avatar
Gee Cramer I just put Wp7.5 onto a older windows phone. So that I could try it out. The windows 7.5 is awesome to use. I for one am excited about it. Although I do own a Iphone I have been wanting a eco system like the windows phone 7 for a long time.
avatar

Cramer is definitely wrong about this one. He obviously blinded by apple's success. Aren't we all ? Nokia has said that they are not relying on just one phone to do their bidding. But a whole array of phones that will make up their line up. Further more this always opportunity in the phone business to grow. Rim could still make their way out. Kodak gave up they were not beat completely. Nokia just needs to stay the course not bend to weak stock.

Apr 12, 2012 4:05PM
avatar

the rest of the year will see cramer leading his lemmings over the cliff

as sure as the sun rises..........that's his scam and he plays better than madoff

Apr 12, 2012 3:51PM
avatar
but lets give him credit for getting apple right

Getting it right when? I'll have to do some research on that. I've been in and out of Anally, Apple, Cisco, GE, Ford, Intel, Microsoft, Nokia and dozens of others over the last 20 years. Lastly Apple, about 100 to 333 and then bailed. Intel 18 to 24 and bailed. Microsoft 24 to 29 and bailed. There's no way I could stay in a fad or momentum stock after 200-300%. He may have just called the top for Apple and bottom for Nokia but let's see how the rest of the year plays out.

Apr 12, 2012 3:38PM
avatar

but lets give him credit for getting apple right

bulls make money

bears make money

blind pigs find an acorn occasionally

Apr 12, 2012 3:35PM
avatar

i don't have time to list all his gaffes but here are some you can research on your own

gold at 1900

nyx  90

eca 21

chk 25

short hpq 23

sell bac 5

aa 18

aa 12

short aa 8

 

these are just some of this idiots "rigorous" picks

Apr 12, 2012 3:28PM
avatar

he said sell BAC at 5.........almost an exact bottom

 sell nokia at 4 will be the bottom

this guy is the diarrhea of commentators

Apr 12, 2012 3:25PM
avatar
Nokia, RIMM, and Microsoft should merge together to survive and fighting back.
Apr 12, 2012 3:04PM
avatar
itis already moving up Jim and it is not the end of the year...buy buy buy 
Apr 12, 2012 2:54PM
avatar
Cramer, is a Wall Street insider he only cares about the money in his pocket. He does well because the sheep, the wannabees, cater to all his self proclaimed fantasies. When the revolution comes he will not be so vocal, ignorant and arrogant.   
Apr 12, 2012 2:54PM
Apr 12, 2012 2:49PM
avatar
Do all of you in America really "Buy all of hype?" We are 16 trillion in debt and derivatives now total well over 1.2 Quadrillion (that's 1200 trillion). Wall Street and it's ardent supporters, Cantor, Ryan, and other self absorbed idiots push the mantra, debt and more debt is the way. Line up sheep and submit to authority - the big money authority, so you can be fleeced. 
Apr 12, 2012 2:32PM
avatar

Jim, not sure about this call.

Tech changes so rapidly that making any short call is almost a waste. With a giant like Nokia that has tons of patents and new stronger leadership, I cant see how NOK is not a buy at ~$4.

 

Parterning long term with Microsoft is without a doubt a win win strategy.

 

Look at the streamlined user expeirence between Xbox, Win8 and Windows phone 7. Their strategy is massive.

Both companies have some very bright people and putting them below RIMM is a joke. RIMM is toast and will go by the way of Palm as a one trick pony.

Apr 12, 2012 2:24PM
avatar
Just another Apple fanboy... useless.
Apr 12, 2012 2:00PM
avatar
cnbc and msnbc used to provide worthwhile business news; not any more. They both have morphed into now providing 24/7 political propaganda in addition to for the most part, infomercials for their advertising customers and worthless economic projections. They now appear to be more interested in promoting right wing Tea Party agenda than providing good Business News reporting. If any one else had  live streaming quotes Ticker I would not watch them at all. I definitely no longer listen to them, and my investments are doing quite well. You'll get better financial investing insight  watching the 3 stooges, in my opinion. Channel 64 in my area. Too bad, it used to be a good Bus. News channel. Follow your own intuitions or hire a good honest financial advisor --- if you can find one.
Report
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
Categories
100 character limit
Are you sure you want to delete this comment?

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

STOCK SCOUTER

StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

125
125 rated 1
267
267 rated 2
455
455 rated 3
612
612 rated 4
682
682 rated 5
695
695 rated 6
632
632 rated 7
472
472 rated 8
279
279 rated 9
147
147 rated 10
12345678910

Top Picks

SYMBOLNAMERATING
VZVERIZON COMMUNICATIONS9
TAT&T Inc9
CTLCENTURYLINK Inc8
EXCEXELON CORPORATION8
AAPLAPPLE Inc10
More

VIDEO ON MSN MONEY

ABOUT

Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.