The article was written by Motek Moyen Research Seeking Alpha’s #1 Writer on Long Ideas and #2 in Technology – Senior Analyst at I Know First.

Nokia Share Price

Summary:

Nokia’s stock is boring right now. Nokia’s YTD return of -20.51% is pretty disappointing.

Investors doesn’t seem to appreciate Nokia’s newfound glory as the world’s leader in LTE network infrastructure industry.

Foxconn releasing Nokia-branded Android phones might perk up investor interest in Nokia again.

Nokia will earn royalty/licensing fee on every Nokia-Android phones that Foxconn/HMD Global will ship out. Nokia-branded smartphones can be sold again this Q4 2016.

Nokia has buy signals from the market trend algorithmic forecasts of I Know First.

The last quarter of the year is almost here. HMD Global/Foxconn could sell Nokia (NOK) Android phones just in time for the holiday shopping season. Foxconn/HMD Global is the right partner that will help realize Rajeev Suri’s promise last year that Nokia smartphones will be back on the market again this year.

My fearless forecast is that Foxconn, being the contract manufacturer of iPhones and Android phones, will be able to build top-caliber Nokia-branded Android smartphones. My other fearless forecast is that the release of Nokia Android phones could inspire more investors to support NOK. Winning LTE network infrastructure roll-out contracts is no longer a catalyst that can boost Nokia’ stock.

Nokia’s -20.51% YTD return this year reeks of long-lingering pessimism. This is in spite of Nokia winning major LTE roll-out contracts this year. Gartner even declared Nokia the leader in LTE network infrastructure industry. It failed to dispel the bearish outlook for Nokia.

(Source: Gartner)

Nokia’s integration losses over the Alcatel-Lucent purchase is perceived as a long-term headwind. Owning Alcatel-Lucent propelled Nokia to the top of Gartner Magic Quadrant for LTE Network Infrastructure. However, Nokia will probably take a longer time to cut the fat, swallow, and digest Alcatel-Lucent. Reducing the redundant workforce and overlapping business segments will keep hurting Nokia until 2018.

Selling Android Phones Could Boost Nokia’s Stock

My takeaway now is that investors might forgive Nokia’s near and medium-term hardship if Foxconn could start selling Nokia-branded Android phones next month. Let us not forget that Nokia will get a royalty/licensing fee from every Android phone that Foxconn/HMD Global will ship out.

Foxconn has had several months to prepare its Nokia-branded phones. Mike Wang, a senior executive in Nokia China has already hinted that Android phones and tablets are due this last quarter of 2016. I hope that Foxconn or HMD Global will unveil and launch them in time for the holiday shopping season. Unveiling it this year and selling them in Q1 2017 is simply not ideal.

Nokia’s management has compelling reasons to offer something hopeful for its investors before this year ends. A 2016 comeback on smartphones could just be the catalyst that investors are waiting for before they take interest in Nokia’s stock. The Nokia brand is still global icon that has loyal followers.

All Foxconn had to do to succeed is to build a $399 iPhone 7-looking Android phone with great battery life, good gaming performance, and decent cameras. Xiaomi, Huawei, and Lenovo (LNVGY) sell iPhone-looking Android phones which helped them succeed. I bet that Foxconn itself was the contract manufacturer who builds iPhone-clone Android handsets.

Alcatel-branded phones helped TCL Communication became the world’s no.8 vendor of smartphones. TCL bought 100% right to use the Alcatel brand on phones in May 2005. Nokia’s phone brand power is certainly more famous than Alcatel-Lucent’s old Alcatel brand of phones. Unlike Microsoft (MSFT), Foxconn’s Nokia-branded Android phones won’t suffer from “lack of apps” stigma of Windows Lumia phones. It was the shortcoming of Microsoft’s Nadella that he wasn’t able to attract enough app developers to back the Windows Phone platform.

The Android platform is very robust with more than 2.2 million apps and games.

Aside from Android’s superior app store, Foxconn will also have an easier time marketing Android phones with Nokia’s famous logo. The event that led to Microsoft quitting the low-end Windows phone hardware business started two years when it lost the Nokia branding for its Lumia products. Slapping Microsoft’s logo on Lumia models clearly did not impress Nokia loyalists. It was also a blunder that Microsoft only released the flagship Lumia 950/950 XL handsets late last year. Microsoft made the mistake of focusing on entry-level Lumia phones that failed to gain traction against $50-$100 Android phones.

Most buyers still opted for the $100 Android phone over the $100 Lumia product because the former provides access to more games and apps.

Conclusion

I expect Foxconn/HMD Global to sell 10-40 million Nokia-branded Android phones every year. If Nokia gets $15 on each handset, the economic benefit could be worth up to $600 million of easy licensing money for Nokia. This is pretty small change but the halo effect of Nokia phones achieving commercial success could still boost NOK’s stock price.

Nokia will always be known as a mobile phone vendor. It is its greatest legacy. Investors will likely only become bullish again if Foxconn/HMD Global could prove that Nokia’s brand power is still potent among smartphone customers.

My buy recommendation for NOK is again supported by the positive signals from its algorithmic forecasts. I Know First’s near and long-term forecasts for NOK are all positive. NOK is unlike to fall down below $5 during the next twelve months. Rather, I Know First is predicting that Nokia has upside potential.

Hedge fund managers also have positive outlook for Nokia. More hedge funds have been increasing their position on NOK since Q2. Small retail investors more often than not can profit from imitating the bets of big fund managers.

I Know First Past Success With NOK:

I Know First has been bullish on Nokia in past forecasts. Since then, NOK has been up over 36%, or $1.50 to date.

This forecast was sent out to I Know First subscribers on August 20th 2013. To subscribe now click here.