Nokia and RIM Are Not the Same

The share prices of Nokia (NYSE: NOK) and Research In Motion (NASDAQ: RIMM) show that investors do not see the two companies as being in the same predicament. RIM’s stock price has dropped more quickly and drastically over the past 10 months. RIM is trapped in the smartphone business, in which it has become a failure. Nokia still has a relatively successful low-end handset business.

According to a report on first-quarter 2012 cellphone and smartphone sales from research firm Gartner, Nokia dropped behind Samsung as the world’s largest maker of handsets. The Finnish company still had a 20.8% share to Samsung’s 23.5%. But the two firms sat well above number three handset vendor, Apple (NASDAQ: AAPL), which had worldwide market share of 8.8%. RIM was not among the top five companies in handset share. It was included with the companies in the “other” category.

Gartner’s measure of smartphone share showed Samsung at 29.1%. It was not far ahead, though, of Apple’s 24.8%. Nokia was a distant third, with a share of 8.2%. RIM’s share was 6.7%.

Nokia may never again be a force in the smartphone market. However, with large cost cuts, the firm can survive on the cheap cellphones it sells in third world and developing nations. Nokia sold 83 million handset units in the first quarter, which ought to be enough on which to stabilize a business.

RIM lacks a similar business to fall back on.

Douglas A. McIntyre