Every time Nokia is mentioned in a discussion about stocks, a strange thing occurs. People stop. They cock their heads slightly, as though remembering a school buddy they haven’t given much thought to in fifteen years. “Wait, they’re still around?” is typically said after that. Indeed, they are. To a great extent. In one form or another, the stock has been trading on the Nasdaq Helsinki and the New York Stock Exchange for a longer period of time than the majority of tech companies.
The first thing you notice about Nokia is how little it resembles the brand that most casual investors are familiar with. The phones, the unbreakable 3310, the Snake game—that era came to an end more than ten years ago when Microsoft acquired the mobile company in 2014 and combined it into Microsoft Mobile, which quietly disbanded shortly after. The company, Nokia, continued to operate. It turned its focus to telecommunications infrastructure, acquired Alcatel-Lucent and the storied Bell Laboratories in 2016, and began constructing the unglamorous backbone hardware that powers the world’s 5G networks. This doesn’t make for exciting headlines. Perhaps that’s the idea.
For years, that uncertainty has been reflected in the share price. Investors don’t quite know how to price the romance of a company that once accounted for 4% of Finland’s GDP and now sits as a mid-sized industrial name among Euro Stoxx 50 components, but they seem to believe in the long-term thesis—patents, network equipment, a steady income stream from licensing deals with nearly every major phone vendor on Earth. Now, the peak seems almost legendary. Nokia accounted for 70% of the Nasdaq Helsinki market capitalization in 2000. Even though that number is technically from a different century, it reads that way today.
You could be forgiven for not realizing that Espoo is one of the top three manufacturers of network equipment in the world if you happened to stroll past its headquarters on a gloomy Finnish afternoon. The place has a Nordic restraint; it lacks Shenzhen scale and Silicon Valley swagger. Only patent portfolios, engineers, and attorneys. It’s difficult to ignore how much of Nokia’s true value is found in non-photographic sources, such as licensing agreements, standards contributions to GSM, 3G, LTE, and now 5G, and the gradual accumulation of intellectual property that rivals covertly pay to use.
This is the reason the stock is so intriguing. The market may still be undecided about the type of business it is interested in. Is Nokia a hardware supplier engaged in a fierce, profit-driven competition with Ericsson and Huawei? After thirty years of telecom innovation, is it a patent licensor with a moat carved out? Or is it something more bizarre—a cautious, slow conglomerate exploring new frontiers in digital health by acquiring Withings, experimenting with virtual reality, and observing the development of the Internet of Things? Most likely all three. A breakout valuation is not warranted by any of those identities alone. They make a strange kind of sense when combined.
Speaking with those who keep a close eye on the stock, it seems that Nokia rewards perseverance more than most tech brands. After being suspended for years, the dividend resumed. Renewals of licenses have contributed to an improvement in free cash flow. Once a pain point, the 5G rollout has become something of a quiet strength as North American carriers have moved away from Chinese suppliers. This story is not loud in any way. It’s not meant to be at all.
However, as you observe this from the outside, you begin to question whether this quietness is precisely the kind of advantage that the market continues to undervalue. At one point, Cisco was written off. IBM was, too, on several occasions. Years ago, Tesla was subject to similar skepticism before the storyline drastically shifted. It’s still unclear if Nokia will experience a similar moment. The setup is unique: a 161-year-old business that started out as a pulp mill on the Tammerkoski rapids is now selling routers and 5G base stations while collecting royalties from phones that have other people’s logos on them. The stock doesn’t have to be your favorite to be intriguing. All you need to do is be prepared to see past the nostalgia.
