Nokia: More Momentum on Win 8 Later This Year, Says Nomura

As I mentioned earlier this morning, Nomura Equity Research’s telecoms analyst Stuart Jeffrey related today that he was “disappointed” with what he saw from Nokia (NOK) at the Mobile World Congress telecom show that went on the last three days in Barcelona, Spain.

Nevertheless, Jeffrey also offers some hope for later this year, when Microsoft‘s (MSFT) “Windows 8” will presumably shipping on Nokia phones.

One of the disappointments for Jeffrey this week was that Nokia’s latest offering of phones running Microsoft’s Windows Phone, called the “Lumia 610,” is priced as he expected, at �189, or $250 in U.S. dollars, but that is higher than the $200 that he thinks it should have been priced at to move units. “We do not consider a $250 price point competitive given the sub-$200 prices of very capable Android phones that have come and are coming to market.”

As for the cheaper “Asha” devices, Jeffrey was disappointed they don’t yet feature touch screens, “which we consider essential to battle both lower-priced Android devices and Samsung�s Electronics‘s (005930KS) low-end Bada platform.”

The “808 PureView,” with a 41-megapixel camera sensor, is “amazing,” concedes Jeffrey, especially as it takes very good low-light images, which is unusual for a high-density sensor that isn’t in a tripod-mounted camera. But the fact that it runs the older Symbian operating system, and costs �480, or roughly $639, are both factors that will limit it to low volumes of sales. Still, it’s important for Nokia that it can bring this technology to Windows down the road, he adds:

We view this Pure View technology as a compelling differentiator for future Nokia Windows Phone devices (perhaps from Windows Phone 8) � especially if Nokia can make the camera a little thinner still.

Not being mentioned by Microsoft during the Windows 8 kick-off yesterday was also a disappointment for Nokia. However, the stock could turn around later this year, writes Jeffrey, as Windows 8 developments in the phone area become clearer:

We believe that Windows Phone 8 will launch in September or October, that this will come at the same time as Microsoft launches Windows 8 and Windows on ARM, and that this combination together with a revamped cloud offering will make the Microsoft ecosystem appear much more competitive � especially in relation to Android � than it does currently. Moreover, we also believe that Nokia expects to ship WP8 devices in volume in Q4. If our information and assumptions prove correct, then Nokia is likely to exit the year with positive momentum. We believe investors will focus on the potential turnaround story and expect this to possibly drive a strong stock performance late in the year.

Jeffrey maintains a Reduce rating on shares of Nokia.

Update: On the other hand, R.W. Baird‘s Will Power, who has a Neutral rating on Nokia shares, is encouraged by the “buzz” at the Nokia booth and what he saw:

We came away impressed with Nokia’s new Lumia devices, and the potential for longer-term differentiation relative to Android, particularly when combined with reinvigorated innovation at Nokia. That said, competitive pressures from Android at the low- to mid-end appear to be accelerating, which is likely to pressure results for at least several quarters.

Nokia shares today are down 2 cents, or 0.4%, at $5.27.

we also believe that Windows Phone 8 will launch in September or October, that this will come at the same time as Microsoft launches Windows 8 and Windows on ARM, and that this combination together with a revamped cloud offering will make the Microsoft ecosystem appear much more competitive � especially in relation to Android � than it does currently. Moreover, we also believe that Nokia expects to ship WP8 devices in volume in Q4. If our information and assumptions prove correct, then Nokia is likely to exit the year with positive momentum. We believe investors will focus on the potential turnaround story and expect this to possibly drive a strong stock performance late in the year.