The question is whether Nokia is ripe for a turnaround or will it enter the dustbin of history like the Palm Pilot?
Most U.S.-based investors have a hard time valuing Nokia because it's brand is weak in the U.S. The company shipped 107 million phones in the third quarter, most of which were lower-cost models sold in emerging markets.
Clearly, Nokia is a company with a lot of problems. Revenues were down 13% last year and the company reported a loss of $0.03 in the last quarter.
Worldwide market share has plummeted for Nokia. Nokia’s Smartphone worldwide market share dropped from 30% to 15%. Nokia is all but out of the game when it comes to smart phones.
Or is it?
Nokia has abandoned its Symbian operating system in favor of Windows 8. Essentially investors would be betting on the introduction of Windows 8.
One of the keys for investing in the mobile phone space is to follow the reviews of new products. Since technology changes rapidly, investors always need to scour tech reviews to find the latest hot products. The latest Nokia phones are receiving good reviews.
In addition, mobile Windows 8 has received rave reviews. Critics actually think that the user interface is equal if not better to the iPhone.
Nokia has a strong balance sheet with $2 of cash per share. As long as the company does not bleed cash any time soon, the downside risk might be limited to 50%. However, if the roll-out of Windows phones is as strong as expected, the upside reward could be significantly greater.