I remember back in the 1990s, Nokia (NYSE:NOK) was the top phone maker in the world. I was very excited when I bought a Nokia phone with a QWERTY keyboard and the ability to function off Wi-Fi. If only I’d also bought NOK stock…
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The Communicator 9000 was a very popular phone abroad but you could only buy one in the U.S. off of eBay (NASDAQ:EBAY) from people who were living abroad. While Blackberry (NYSE:BB) was the iconic keyboard phone, my NOK was one of the first phones to offer Wi-Fi connectivity and quality camera phones.
It was certainly a cool, if clunky, device. But the thing was, there were very few Wi-Fi hotspots and fewer people interested in expanding them. I mean, Google was still fighting it out with Netscape and Lycos.
But as will all mobile technologies, NOK’s dominance — at least in the US — didn’t last past the first mobile wave. Today, NOK is the No. 10 phone maker in the world.
NOK Stock Beyond Phones
As with most real mobile phone makers, there needs to be something beyond the handset to keep investors interested. I mean, the company has been around for 156 years and NOK stock sports a $34 billion market capitalization, so it has built a real business beyond mobile phones.
Actually, Nokia lost traction when smartphones became the new big thing. The Finnish company decided to go after the immense global market that didn’t have mobile phones at all, not the select markets where demand from smartphones was growing.
Some of that miscalculation came because networks were pretty primitive, and adoption was patchy, at best, outside of developed nations. And putting cheap mobile phones in people’s hands looked like a much better business than hoping high-end networks and phones would catch on. The rest is history.
Well, almost history. Nokia lost its visibility among consumers, but the Nordics telecom continued to be a major player behind the scenes. In 2014, it unloaded its handset division to Microsoft (NASDAQ:MSFT) for more than $7 billion. Good for NOK, bad for MSFT and the Windows phone.
That allowed NOK to focus on the connectivity of mobile telecom. It has helped build out standards like GSM, 3G, and LTE technologies and the equipment to support those networks. Today, it’s a key player in 5G technology, with major partners developing networks in China, Canada, and Europe.
Don’t Mistake Visibility for Success
NOK stock looks like an also-ran to most U.S. investors who remember its mobile phones. But to anyone who follows the telecom sector in depth, Nokia remains a significant player. It’s a highly respected in Europe, the Middle East and Asia. And its equipment business is brisk around the globe.
Granted, there are more competitors these days. But the loss of its handset dominance isn’t reflective of the entire company’s disarray.
Certainly, after the dotcom bubble burst, Nokia lost its high-flying celebrity, and it was in the wilderness for a while. And when it reemerged, there were a new slew of companies with a new generation of smartphones that began to dominate the landscape.
But its infrastructure and R&D made these new developments possible. And the company continues to be a major force behind the scenes.
It’s ironic that its 21st century comeback in the U.S. is as a meme stock. That notoriety has certainly added fuel to the stock’s 53% rise year to date. To put that run into perspective, NOK stock is up only 18% in the past 12 months.
One of NOK’s key 5G technologies is that it can convert signals of different carriers to a 5G signal. It also recently won a contract in the Netherlands to provide a next-gen optical fiber network to one of largest internet companies in the Netherlands.
Hopefully this success with drive the meme traders and other silly money out for sexier long-shots. The stock popped recently but is now slowly losing steam.
If you’re a long-term investor, NOK stock is an interesting speculation around $5 a share.
On the date of publication, GS Early did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
GS Early has been an award-winning financial writer and editor for nearly three decades, working with many of the leading financial editors and publishers during that time. He’s seen a few things and heard plenty.
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