Bears Sound Note of Caution on Nokia Corporation (ADR)(NYSE:NOK), RIM Prospects

It was not a great outing for Nokia Corporation (ADR)(NYSE:NOK) and Research In Motion Limited (USA)(NASDAQ:RIMM)’s  shares on Tuesday as they reversed the gains made on the previous day, with speculation still continuing to rage over who would be the beneficiaries of the court verdict favouring Apple on Friday last week.

On Aug 24, a San Jose federal court jury ruled in favour of Apple in its patents dispute against Samsung, and awarded the Cupertino company more than a billion dollar in damages, while holding that the Korean handset maker had infringed on its patents and copied its designs.

Nokia's U.S.-listed shares fell 7 percent to $3.03 on Monday and another 4% on Tuesday while that of RIM fell about 0.7 percent to $7.02on Monday.

Analysts are backing Nokia as the favourite to gain from the verdict against Samsung, which along with its partner Google will have to rethink strategies.

Can NOK recover? Find Out Here

Nokia running on Windows mobile operating software did have the chance to recoup the market share it has been losing for a while now to Apple and Samsung, analysts felt.

The Finnish handset company is holding an event jointly with Microsoft on September 5 and speculation is rife that the company will be releasing its next new smartphone, most likely to be part of its Lumia series.

RBC Capital Market in a note had said on Monday, "Nokia may be another beneficiary of the verdict with its unique Lumia form-factor and its partnership with Microsoft. Additionally, both companies have a treasure trove of mobile patents, which we believe, safeguard them from possible patent litigation.”

However on Tuesday some bears stepped in to introduce a bit of caution.

Adnaan Aamad of Berenberg Bank was optimistic about Windows 8 operating software but on Nokia said, "In developed markets in Q4 and H1 2013, Nokia products are going to compete against the iPhone5 and Samsung Galaxy3 and 4. No chance, in our view. And, ultimately, Nokia is a hardware manufacturer that will compete with Samsung (and the like) if MSFT’s ecosystem is successful. At 2.5 euros, assuming a 10x PE, the market is pricing in 5 percent operating margins for devices, and 25 percent handset market share – that’s up from the recent low of 22 percent, that is, every 5 percent market share on these assumptions equals 5 cents of earnings. Smoking something – sure seems like it to us."

Another analyst said that consumers wanted iPhones and Androids and not Windows phones and Blackberries.

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