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Nokia Corporation (NOK - Analyst Report), once the world’s largest mobile phone maker, seems to revamp its struggling handset business by creating modest demand for it’s newly launched Windows 8-based Lumia 920 smartphones in Germany and the U.S.

With the holiday season ahead, Nokia like other smartphone manufacturers are all set to grab this opportunity by launching all new series of smartphones. Nokia revealed two new smartphones – Lumia 920 and 820 on November, 6.  

Both the Lumia handsets are powered with rich features (PureView camera, 4GLTE technology, Windows 8 OS, numerous apps), hence giving them every chance of regaining its lost glory.  In the recently concluded quarter, the company reported declining smartphone sales. The company shipped merely 6.3 million smart devices (inclusive of 2.9 million Lumia-series phones) during the last quarter as compared to 23.6 million Apple Inc.’s (AAPL - Analyst Report) iPhones.

However, the trend is expected to change as Nokia’s newly launched Lumia 920 and 820 are well set to mitigate the loopholes that existed with earlier Windows 7-based Lumia series of devices.

According to Amzon.com Inc.’s (AMZN - Analyst Report) latest report related to the smartphone sales, Lumia 920 holds the second place after Motorola's DROID RAZR MAXX HD 4G. Moreover, AT&T Inc. (T - Analyst Report) – the second largest carrier in the U.S. holds the exclusive rights of Lumia 920 device. In addition, Apple’s new iPhone 5 missed the analysts’ sales expectation mainly due to lackluster product mix as compared to its earlier handset releases, hence giving a ray of hope to Nokia – to gain some market traction. Furthermore, continuous legal tussle between Samsung Electronics and Apple coupled with improving average selling price for Nokia’s smart devices (up 18% year over year) will continue to create that opportunity for the company for revamping its market share.

Smartphone penetration is still quite low especially in developing countries like India and China (two largest populated countries), which happens to be another growth catalyst for Nokia as the company is already having strong and dedicated customer base in those parts of the world. Moreover, demand for smartphones is on the rise with a substantial 47% year-over-year growth, as per Gartner research firm.

Despite such breakthroughs, which Nokia might receive while moving ahead, the company still happens to be way behind Samsung and Apple’s smartphones, which are well supported with strong operating system and huge apps. 

We maintain our long-term Neutral recommendation on Nokia. Currently, Nokia has a Zacks #3 Rank, implying a short-term Hold rating on the stock.

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