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Nokia Allies with Verizon

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Beleaguered handset manufacturer Nokia Corporation (NOK - Free Report) finally teams up with the largest U.S. telecom carrier Verizon Communications Inc. (VZ - Free Report) – to sell new Windows Phone 8-based smartphones during the fourth quarter of 2012.

On September 5, 2012, Nokia unwrapped its latest Lumia offering, which runs on Microsoft Corporation’s (MSFT - Free Report) Windows Phone 8 software. The company’s flagship Lumia 920 and the smaller Lumia 820 with several new additional features is believed to be the last gamble from Nokia to get back the customer confidence in Windows-based smartphones.

For Verizon it will increase the number of smartphones offering and add a third operating system in its scheme to the already existing Apple Inc’s. (AAPL - Free Report) iOS and Google Inc’s Android. However, Verizon which has HTC Trophy as the only Windows phone hasn’t announced any specific date or price for the offering.      

Earlier, on April 8, 2012, the Finnish handset manufacturer tied up with AT&T Inc. (T - Free Report) to sell Lumia 900 – the first LTE phone from Nokia. Furthermore, T-Mobile USA became the first carrier in January 2012 to launch Lumia series of smartphones in the U.S. The new partnership will be seen as welcome news for Nokia Corp. as it will have three of the top 4 U.S. carriers under its stable, offering Lumia handsets.         

This event is one of the very few positive news for Nokia among several other things to worry about. We believe with Verizon’s wide LTE coverage in the U.S. and Lumia 920 supporting LTE, the partnership could turn out to be a shot in the arm for Nokia to win back the data hungry U.S. customers who are constantly looking for higher speed and coverage. However, the company has to fight competition with Samsung Electronics Co. which recently unveiled its new Windows Phone 8-based smartphone.

The current Zacks Consensus Estimate for Nokia Corporation is pegged at a loss of 12 cents for the third quarter of 2012 with a growth rate estimate of (397.22%). For 2012, the Zacks Consensus Estimate stands at a loss of 38 cents with a growth rate of (200.46%) while for 2013, the Zacks Consensus Estimate stands at a loss of 1 cent with a growth rate of 96.47%.


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

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