NOKIA (NOK, $17.07) announced that the company will undergo a rigorous restructuring phase that will consist of shuffling around the current management, while adding multimedia and enterprise divisions to compliment the mobile and network branches. The company named new mobile phone and finance heads and said it would split into four divisions from three, in a bid to shore up its top position in the cut-throat global cell phone market.
TODD'S TAKE: Nokia is taking a step in the right direction, as the company has increased its competitiveness in the global market. The new plan distributes Nokia's Mobile Phones Unit among different groups to allow more specific product development, marketing and consumer focus.
The new multimedia division will concentrate on advancing current technology, producing additional games, music and images. In addition, the enterprise unit will now be a separate division of the company that will specifically work on terminals and mobile connectivity.
Overall, the changes won't have a great impact on the stock price in the near-term. But, there are going to be lots of changes ahead, as Nokia is looking for future acquisitions, and there is speculation among analysts that the CEO could be replaced fairly soon.
Though Wall Street didn't take much notice of the news, we think Nokia is well positioned for a bright future. Fundamentally, Nokia has a PE of 17, is trading 2.1 times sales, and has a 2% dividend. Nokia remains healthy and will continue to draw attention from investors in the near-term.
Restructuring is a good thing when done properly, and from here it looks as if Nokia is making the right moves. The management shakeup is part of Nokia's philosophy to switch up positions from time to time, just to keep the company fresh. The last such move came five years ago and the company did very well since. |
