Having experienced a dramatic decline in its fortunes, Morgan Stanley is alerting investors that Nokia may see a possible turn-around in its financial performance in the fourth quarter.
The global financial services firm says that stock market investors should buy Nokia options given that the company may receive a boost towards its year-end as it switches to the Microsoft Windows Phone 7 operating systems and exits from its Nokia Siemens Networks (NSN) joint venture.
Two Morgan Stanley industry watchers, Praveen Singh, an equity derivatives strategist, and analyst Patrick Standaert, were reported by Bloomberg as recommending investors to buy Nokia December 5-euro calls while selling September 5-euro calls "Nokia is a company in transition facing major headwinds," Singh and Standaert wrote in a note carried by Bloomberg. "Positive news flow on Windows Phone product development and NSN exit could lead to upside in the stock."
Nokia spokesman James Etheridge, told Bloomberg the two parent companies are looking at "multiple options" for NSN. It remains unclear how Nokia and Siemens will resolve NSN's fate. The two companies recently decided to stop attempting to sell a controlling stake in the joint venture to private equity firms, according to a report in the Wall Street Journal.
The report, which cited unnamed sources familiar with the matter, was the latest twist in a nearly year-long saga over whether the infrastructure vendor's parents will sell a stake in the company to a private equity firm. According to the report, Nokia and Siemens are now exploring a "self-help" route for NSN, which will basically involve the parent companies pumping more cash into the joint venture.
- see this Bloomberg article
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