Nokia remains one of my favorite long-term technology plays

I've been buying long-term (2022) calls on Nokia, and they're performing very well this past week. The good news for Nokia has kept rolling in throughout this coronavirus downturn, and Nokia announced today that it has declared a total of 3,000 patents related to 5g. Last year it looked like Nokia was falling behind in the 5g race, but ever since it suspended its dividend to free up cash flow for R&D, it has been fast making itself a 5g leader. Along with BIDU, NOK is one of my favorite long-term tech plays due to low valuation and a large number of hot new technology patents going into product development that should pay off long-term. I will buy more calls on the dips.

Comment:

Nokia has roughly doubled in share price since I made this call, and it looks poised to continue after today's earnings result. Nokia beat on earnings and revenue and raised its full-year EPS guidance (though the new guidance is about in line with Street expectations). More importantly, Nokia expects its 3-5 year profit margin to improve dramatically, and it has now floated the idea of reinstituting its dividend next year.

Comment:

Correction: Nokia beat earnings estimates by 100%, but missed revenue estimates by about 4%. (The exchange threw me off.) Nevertheless, the result was good overall. Nokia expects sales lost due to the pandemic to be shifted to future periods rather than being lost. The company also raised its free cash flow guidance for 2020 from "positive" to "clearly positive."