* Shares down 22 pct since Lumia launch
* 14 analysts say buy, 15 sell, 21 neutral
* 2012, 2013 EPS, dividends to miss consensus -Starmine
By Tarmo Virki, European Technology Correspondent
HELSINKI, Dec 21 Nokia's long-awaited Windows
phones may be too little, too late in the smartphone war and
investment in the shares will increasingly be driven by takeover
Its first Windows model, the Lumia 800, won some positive
reviews but little interest from consumers, with only 2 percent
of Europeans in the market for a smartphone saying they would
pick it, according to a survey by Exane BNP
"This is not a game changer," a senior European telecom
executive told Reuters of the Lumia, which uses Microsoft
Nokia's shares have fallen over 20 percent since the October
26 launch of the new phone, after investors decided it was
unlikely to make a significant dent in a market still dominated
by Apple and Google.
Smartphones using Microsoft software have just a 2 percent
market share, compared with Google Android at around 50 percent
and Apple at 15-20 percent.
"There isn't much room left for a third ecosystem. The
smartphone market is consolidating fast," said Bernstein analyst
Pierre Ferragu who rates Nokia a "sell".
Smartphones are built on mobile computing platforms, and the
most modern combine web browsers, navigation systems, cameras
and portable music systems. A so-called "feature" phone -- a
market Nokia dominates -- has far fewer of these applications.
Microsoft itself has started to hedge its bets, making its
software increasingly available for rivals to Windows Phone.
Even Nokia's old Symbian software, which it decided to dump
in favour of Microsoft, still outsells Windows Phones by 10 to
1. And as Nokia keeps shifting to Windows, sales of Symbian have
a lot of room to disappoint over coming quarters.
Another risk for Nokia investors is the possibility it will
slash its dividend early next year.
Estimates from Thomson Reuters Starmine, which give more
weight to analysts with a better forecasting track record, show
dividends are expected to fall 60 percent from a year ago to
just 16 euro cents for 2011, with the payout seen at 17 cents
Forecasts from Starmine also indicate earnings per share in
2012 and 2013 are set to disappoint. Its EPS estimates for both
years stand 12 percent below consensus forecasts.
Some analysts are keeping the faith, however, believing the
new assault on the smartphone market may be enough to give Nokia
a place at the table. If they are wrong, the attractions of the
handset maker's strong cash position and some prized patent
assets could yield a takeover bonus.
The shares, recently trading at around 3.65 euros, also look
cheap to some. Many analysts cite an improvement in Nokia's
product portfolio, which looked out of date when Stephen Elop
took over as the chief executive in September 2010.
"With current, and upcoming models, Nokia can win back
market share in both -- in feature phones and in smartphones,"
said Swedbank analyst Jari Honko, who has a "buy" recommendation
on the stock. "Today's share price does not take into account
any recovery in the Nokia market position."
And while some argue there is no room for a third
alternative to Google and Apple, some developers and operators
do see room for more competitors in this market.
The 2012 Windows 8 upgrade could attract a wider audience by
giving making the way smartphones, tablets and PCs work more
For investors, the biggest positive surprise could be an
acquisition offer. After Nokia signed a deal with Microsoft,
rumours of full takeover by Microsoft or at least buyout of
smartphone unit have made rounds on a weekly basis.
Last week the stock jumped 4 percent when Danske Bank
suggested Microsoft could buy Nokia's smartphone unit.
But even if investors don't get a rich buyout - online
gambling company Unibet is putting odds on Microsoft buying
Nokia in 2012 at just 15:1 - analysts say the company's
relatively-solid finances should at least offer some security.
Nokia had 1.36 euros per share of cash at the end of the
last quarter. It also has a strong patent portfolio - on its own
worth more than a euro per share - and owns top digital mapping
firm Navteq and half of No 2 mobile network gear maker Nokia