Despite this positive impact on the financials of the company, liquidity remains a major concern for Nokia. Credit agencies have downgraded the company’s overall rating and, to ensure liquidity, the firm has proposed suspending its annual payment of dividends for the first time. Investors will not like this.
A growing giant
Samsung became the largest smartphone vendor worldwide thanks to strong sales of its Galaxy SII and Galaxy Note devices. In the U.S., it is the second largest, behind Apple Inc. (NASDAQ:AAPL), with 22% market share.
Samsung’s latest earnings report shows that the company’s profit soared by 42% to $6.5 billion in this quarter compared to the same period last year. Samsung has challenged Apple’s dominance by flooding the market with a range of new models with a variety of screen sizes and prices and by updating its versions faster than Apple ever has. However, the stock has recently been wiped following slow S4 sales.
After winning the patent case against Apple, Samsung stated that Apple’s history of free-riding on its technological innovations was over. If the case has an impact, it will be for sure positive. Ideally, a ban on Apple’s products and a change in the customer’s conception of Apple – from ‘innovator’ to ‘copier’ – would work fabulously for the company. I doubt this scenario is very likely though.
Given Samsung’s recent history and the fact that it announced it had finally managed to test speed-enhanced fifth generation (5G) technology successfully, I consider the company’s recent bad performance to be something temporary. Even if S4 sales do not grow, Samsung’s strategy of building a strong presence in each segment will prove successful.
Bottom line
Both Apple and Samsung have strong balance sheets, but Apple’s results were not as good as last years’ whereas Samsung’s improved enormously. I believe Samsung will not stop growing in the near future. Its products will keep on penetrating every category and niche, backed by constant investments in research and development.
Apple Inc. (NASDAQ:AAPL), on the other hand, appears to be at a standstill and will need successful new products to maintain its leadership in the US. Until I see a new release with good acceptance, I would stay away from this share.
As far as Nokia Corporation (ADR) (NYSE:NOK) is concerned, the company is struggling, and its glory days in the mobile industry seem far behind. Recent growth in sales may bring some improvement in the future but it is still hard to think the company will catch up with its peers. Windows Phone is the key and should be closely monitored.
Louie Grint has no position in any stocks mentioned. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple. Louie is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
The article The 3 Leading Mobile Companies: Where Are They Heading? originally appeared on Fool.com and is written by Louie Grint.
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