Bernstein Research analyst Pierre Ferragu cut his rating of Nokia’s stock today to underperform. Citing recent changes in management structure, most notably the new CEO, Stephen Elop, and the departure of Anssi Vanjoki, Pierre says that Nokia is starting the 2010 holiday season and the whole of 2011 off on the wrong foot. Pierre also notes that the amount of Android devices being sold is accelerating so rapidly that in the near future there will be more of them sold than anything powered by either Symbian or MeeGo. Most difficult to believe is his prediction that the mobile industry will be in a bind next year, growing only 5% in terms of unit shipments, yet have little to no value growth.
Now how can that be? Are we entering another recession? Possibly. Unemployment remains high and banks have practically stopped loaning money, but if that’s the case then who are all these people buying Android devices? Are they the customers who have been putting up with their dead bead device for so long that they’ve had enough and are now due for an upgrade? Are they the Asians, who are on track to buy the most smartphones out of all the markets where advanced devices are sold?
Nokia’s Q3 results are due to be published in a little under a month and there results will be telling. The Nokia N8, which was announced on April 27th of this year, is now 5 months old before even hitting the market. At the rate things are going it’s going to be 6 months old, and may even prove to be as delayed as the mega successful N95. That 1 device aside, Nokia has been having difficulty ramping up production on lower end devices as well. The C3 is experiencing shortages in Western Europe since all available units have been diverted to the Far East.
Pierre says Nokia’s stock price, which as of 13:56 Helsinki time stands at $9.81, will go down to $6.67.