Finnish technology company Nokia, known for making mobile phones, announced plans on Sunday to rebrand itself, the first time this has happened in almost 60 years. Along with announcing the launch of a new logo, Nokia also announced plans to compete with big tech companies such as Microsoft and Amazon in factory and data centre automation. What else could we learn and what impact could this have on the company's shares?
Nokia, a history from phone manufacturer to telecommunications company
Nokia is a Finnish company that manufactures and distributes telecommunications equipment and software for telecommunications networks. Nokia is a manufacturer of telecommunications equipment, offering solutions for mobile, fixed and cloud networks.
Currently, Nokia's business model consists of three main elements:
- Sales of products and services. The company offers its products and solutions to telecommunications networks, enterprises, cable operators and Internet providers worldwide.
- Patent licensing. Nokia holds a number of patents in the field of communication technologies, which it licenses to other companies in exchange for royalties. This sector is mainly a collection of patents related to telecommunications technologies.
- The company also works with telecom operators around the world, offering support in the design, implementation and maintenance of their networks. These collaborations also include network and technology research and development.
In the past years, Nokia has reduced its presence in the smartphone market. The company is now focusing on offering technology solutions for the telecommunications and industrial sectors.
What did we learn at the presentation?
Nokia has changed its brand identity for the first time in almost 60 years, unveiling a new logo. The change reflects a focus on aggressive growth and a shift in emphasis to providing technology services to businesses. Nokia CEO Pekka Lundmark shared that the company's main focus is now on selling products to other companies. In the business services sector, Nokia recorded 21% growth last year. The company plans to analyse the growth path of individual businesses and consider alternatives, including disinvestment, to focus on businesses where it could see global leadership. It is also moving towards factory and data centre automation. As Pekka Lundmark puts it: "We were associated with smartphones and now we are a business technology company."
Unexpected announcements by the company after the presentation
Source: Nokia
Nokia has unveiled a new product for its latest generation of radio MIMO technology (a data transmission technology that uses multiple transmit and receive antennas) called Habrok. According to the company, Habrok devices are easy to install, allow for efficient deployment and operation in mobile operator and enterprise networks. The equipment also enables improved energy efficiency. They are scalable, support new technologies and provide high network performance. The product was announced at the end of this year.
Nokia has announced the launch of its new anyRAN concept to help mobile network operators and enterprises choose the right Radio Access Network (RAN), hybrid or cloud-based solutions, regardless of their business model. The company said it is also developing partnerships with cloud infrastructure and data centre leaders to offer end customers flexibility and choice in RAN cloud solutions.
At the very end, the company announced that it had been selected for the first time by MTN South Africa (one of South Africa's largest network operators) as one of the 5G Radio Access Network (RAN) equipment providers. As part of the contract, Nokia will upgrade the existing 2G/3G/4G radio network and expand the 5G radio network to 2,800 stations in parts of central and eastern South Africa, contributing to the digitalisation of the country. The company informs thats it will provide the latest technology solutions. The company will also provide its Self-Organising Networks (SON) solution for network optimisation and performance.
It seems that announcements of a change in the company's business model are not empty words. Nokia is moving away from the smartphone segment and focusing on the services, products and industries it has learned to deal with over the past decade.
What does Wall Street think of Nokia OYJ's share price?
According to the Market Screener website, the company has 25 recommendations, most of which are buy recommendations. The average target price is set at USD 5.6, 24% higher than the last closing price. The highest target price is at USD 7.35 and the lowest is USD 4.33.
Source: Conotoxia MT5, NokiaOyj, Daily
Grzegorz Dróżdż, Market Analyst of Conotoxia Ltd. (Conotoxia investment service)
Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results.
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