It's always darkest before the dawn
I hope you're sitting down, and if you aren't, then find something to hold onto. This week's first entry is ailing phone maker Nokia (NYSE: NOK ) . The reason I'll be reversing my underperform call to an outperform call has to do with the magnitude of the company's drop relative to its patent value, its cash on hand, and its partnerships.
There's no way to sugarcoat the fact that Nokia's failure to anticipate the smartphone revolution has left it clinging to its legacy patent portfolio and low-end, low-margin phones. Even though these phones don't leave Nokia with a bright future (losses are expected over the next couple of quarters), its roughly 10,000 patents do bring in about $650 million in revenue annually and could fetch a higher value in a bidding war than Nokia's current market cap.
Keep in mind that wireless technology patents are popular wish-list items of large tech companies. Google (Nasdaq: GOOG ) ponied up $12.5 billion when it purchased Motorola Mobility to gain access to its patents, while a consortium of Apple, Microsoft (Nasdaq: MSFT ) , and Research In Motion paid $750,000 per patent for Nortel's 6,000 patents. If Nokia's patents sold at such pricey levels, they would be worth about $7.5 billion.
Nokia has also partnered with Microsoft for its new operating system and, unlike RIM, is capable of putting out newer products immediately. Nokia is far from a sexy investment, but the sum of the parts is worth more than its current share price, considering it also has $6.5 billion in net cash.
3 Stocks Near 52-Week Lows Worth Buying (CTCM, NOK, WAG)
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