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To improve its presence in the mass market, Nokia Corporation (NOK - Analyst Report) has unveiled two new affordable touch screen phones based on Symbian operating system.

Nokia incorporated the low-end smartphones – Asha 308 and Asha 309 in its portfolio that will cost $99, exclusive of taxes and subsidies, when it hits the market in the fourth quarter of 2012. The budget phones possess features like – 3 inch screen, 800 MHz processors a 2 mega pixel back camera and are preloaded with EA games. Nokia Asha 309 has an integrated Wi-Fi while Nokia Asha 308 supports two SIM cards with both the phones having video streaming capabilities from YouTube.

The Finnish handset maker, Nokia has been loosing market share to Apple Inc.’s (AAPL - Analyst Report) iPhone and a range of smartphones that run on Google Inc.’s Android operating system (OS). In an effort to improve its falling smartphone market share, the company ditched its Symbian operating system and teamed up with Microsoft Corporation (MSFT - Analyst Report) to develop Windows-based smartphones. However, it seems that the limited success of the Windows-based smartphone is forcing the company to improve its dependence on other OS. 

The low-end smartphones are of special significance to Nokia not only because they carry high margins but as they will also aid in defending challenges from cheaper smartphones from Asian manufacturers. The Oslo, Finland-based Company is particularly targeting the low-end customers of the emerging markets with its latest offering.

Recently, Nokia launched its latest Windows Phone 8 handset but it is expected that mass acceptance of the phone will take some time to materialize. We believe the company is vouching heavily on its Asha range of touch screen devices to compensate stiff competition in the lucrative high-end smartphone market.

The current Zacks Consensus Estimate for Nokia Corporation is pegged at a loss of 13 cents for the third quarter of 2012 with a growth rate estimate of (420.0%). For 2012, the Zacks Consensus Estimate stands at a loss of 39 cents with a growth rate of (202.06%) while for 2013, the Zacks Consensus Estimate stands at a loss of 2 cents with a growth rate of 94.06%.

Recommendation:

We retain our Neutral recommendation on Nokia Corp. in the long run. Currently, it has a Zacks #3 Rank, implying a short-term Hold rating.

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