1. Nokia Corporation Consumer Coverage Group – Winter 2015
Alessandro Grieco, Group leader
Paul Harrison
Albert Gianatan
Michael Ramadan
Aanchal Ramani
Erin Ashley Cohen
Monica Chan
3/5/15

2. Company Profile
Finnish multinational communications and information technology company
Focuses on large-scale telecommunications infrastructures (Networks), technology development and licensing (Technologies), and online mapping services (HERE)
Previously was a significant contributor to the mobile telephone industry before selling that business to Microsoft in 2013
3/5/15

3. Investment Thesis (buy)
Fundamental Analysis
Investment Thesis (buy)
With Nokia’s sale of its Devices & Services business (D&S) to Microsoft, it can begin to steer its way into a new era of profitability driven by focusing efforts on what it leads, namely network infrastructure, location intelligence and IP licensing
3/5/15

4. Management Overview CEO (2009): Rajeev Suri
CEO (2009): Rajeev Suri
- Worked in roles comprising strategy and M&A, product marketing, sales, consulting
- National Account Manager – Transmission / Manager ILC India
Chief Financial Officer (2012): Samih Elhage
- Senior Advisor, leading private equity and global management consulting firms.
- Multiple leadership and management roles related to Network Development at Bell
President of HERE (2014): Sean Fernback
- Senior Vice President of Engineering & Product Development, TomTom,
- Founder and CEO, Motionworks, 1989 – 2000
Executive Vice President: Timo Ihamuotila
- Previously CFO and interim President of Nokia Corporation
- With Nokia rejoined 1999
3/5/15

5. A Nokia You’ve Never Seen
3/5/15

6. Acquisitions Microsoft Acquisition (September 2013)
NOK’s D&S for EUR5.44 billion
EUR3.7 billion for D&S
EUR1.65 billion for 10yr mutual patent licensing agreement
Nokia Siemens Network (June 2013)
NOK NSN for EUR1.7 billion
Joint venture with Siemens Communications
Pioneered development of LTE
Launched Industry’s first M2M software suite for GSM
Restrictions & Arrangements
MSFT received 10 yr license arrangement to use Nokia’s brand name i.e. Lumia
NOK restricted from licensing its own brand name for 30 months
NOK restricted from using its own brand name for its own mobile devices until Dec 31, 2015
Except: the N1 tablet ($250 in China)
What does it mean for Nokia?
Leaning up by shifting over 20,000 employees over to Microsoft, reducing revenues by 46% (2013) equaling over EUR 10.7 billion
Still maintains some of the factories, Nokia isn’t out of consumer electronics completely
Cutting its losses renewed market confidence
3/5/15

7. Nokia renaissance
3/5/15

8. Nokia’s Turnaround
3/5/15

9. Value Proposition - Short Term
Nokia Networks
Fastest growing sector in the three , YoY 35% growth in Operating Profit
Examples of LTE network infrastructure deployment:
China Mobile Chunghwa Telecom in Taiwan; Celcom in Malaysia; Sprint in the United States; US Cellular’s second wave of LTE services; with TIM Brasil and Oi Brasil; Movistar and Claro in Chile; MTS in the Moscow and Central Russia regions; SFR in Paris; Tele2 in the Netherland; Vodafone in New Zealand, and Ooredoo in Qatar….
Cutting-edge LTE-A & 5G deployment in South Korea
HERE Technologies & Technology
Sold HERE Auto location services to over 19 million vehicles 2014
Cooperated with Mercedes to implement location services
Patent licences are “free money”
3/5/15

10. Value Proposition – Long Term
Future is in interconnectivity
Seamlessly integrating
Long-term leadership targeted in three key areas
Nokia believes that over the next 10 years billions of connected devices will converge into intelligent and programmable systems that will have the potential to improve lives in a vast number of areas: time and availability, transportation and resource consumption, learning and work, health and wellness, and many more.
This new world of technology will require 1) connectivity capable of handling massive numbers of devices and exponential increases in data traffic; 2) location services that seamlessly bridge between the real and virtual worlds; and 3) innovation, including in sensing, radio and low power technologies. Nokia’s vision is to be a leader over the long term in these three areas.

11. Change in direction
3/5/15

12. Comps Model
3/5/15

13. Risk Factors
Ability to launch products on a timely basis within the context of a rapidly evolving tech environment
Intellectual property issues
Network infrastructure development in emerging markets + general economic conditions
Networks currently dependent on small number of large multi-year contracts– an issue with or loss of a single contract can carry large effects
3/5/15

14. DCF Analysis Bear: -10% Growth Rate Base: 20% Growth Rate
Bull: 30% Growth Rate
3/5/15

15. Targets and Strategy Buy: at around $7.20
Exit: if stock drops under $3.50
Time horizon: 2-3 years
3/5/15

16. Questions?
3/5/15