Nokia Board of Directors and Nokia Executives Invest in Nokia

Well, whether a move to simply put forward a show of solidarity in their collective believe in Nokia and its future, or whether they simply think the stock has bottomed out and can only head in one direction from here on out (we think so), Nokia CEO Stephen Elop and some of the company’s board members have opted to personally purchase Nokia stock on the open market. Collectively the execs have acquired more than a million shares.

At the same time the board has moved to strengthen its (and senior management’s) hand in being able to use stock options to retain key talent that might otherwise look to go elsewhere as Nokia continues to rebalance itself. The company is now more or less done with massive resizing and needs to turn its attention to holding on to the talent it wants – and needs – to remain on board.

The combination of executive stock acquisitions and the newly declared ability to issue greater numbers of stock options comes at a good time. The stock strikes us at this point as a definite buy, and options that can be granted at the extremely attractive strike prices that are currently possible makes for a very nice retention platform.

It’s about Microsoft

Why? We need to take a quick digression into Microsoft land to answer that. We believe that Microsoft is poised to make a substantial market recovery over the next year relative to its otherwise comatose stock price (which has hung around the $26 - $28 range for longer than we’ve had a legitimate mobile marketplace). Yes, the core company continues to be a powerhouse and continues to steadily climb the Global 500 charts, landing at number 37 in 2012 with $69.943 billion in annual revenue. That is up one spot from number 38 in 2011.

Yet, despite Microsoft’s rather amazing core business capabilities, the stock languishes…why should Apple be worth $600 a share today? True, its meteoric rise to number 17 (up from number 35 in 2011) with $108.249 billion in revenue has something to do with it. Profit for both companies however is almost the same, with Microsoft coming in at $23.150 billion, and Apple hitting $25.922 billion. Not much difference there. The disparity comes from the amount of excitement that Apple generates, and the amount of boredom that Microsoft has generated over the last decade. But we believe that is about to change.

Microsoft’s Windows 8, Windows 8 RT (the ARM version) and Windows Phone 8 are going to generate a great deal of excitement. There will be new tablets – as Microsoft’s own new Surface highlights, there will be new smartphones (and Nokia should play extremely well here), and there will be new enterprise momentum generated. We believe that there will be a significant pop in Microsoft’s stock – finally.

This all bodes extremely well for Nokia. Microsoft will have a long tail for Nokia to ride – if Microsoft is successful at generating new mobile excitement, Nokia will go along for the ride (or catch the big wave – pick your phrase of choice). So, although Nokia’s exec team does show a sense of solidarity, we believe the team is doing so with a strong financial win in sight as well. Nokia can make the same case for its talent pool – anyone who is able to gain new stock option grants will want to stay at Nokia (assuming money matters, of course, to those granted the options).

The Numbers

Per the Wall Street Journal, which reported the news, Elop purchased 275,000 shares and raised his total Nokia holdings to 425,000 shares. Risto Siilasmaa, Nokia's new chairman, purchased 333,000 shares, and at least five other board members also purchased shares. traded in a range of $1.72 to $2.14. The stock purchases, which totaled more than one million shares, were disclosed by Nokia this week. Shares of Nokia have traded up to $2.28 as we write (for comparative purposes the stock was trading at $4.80 range in January 2012.

Nokia’s board of directors disclosed the new stock option plan on Monday morning July 30, 2012 through a press release. The board is increasing its allotment of stock options from 8.5 million to 11.5 million, an increase of 35 percent. The additional stock options will not be granted to the CEO or any of Nokia’s leadership team. They are reserved exclusively for allocation to important senior-level employees the company believes are critical to driving Nokia forward. The options can be granted until the end of 2013 and will vest in two stages, with 50 percent vesting three years after the original grant and the remaining 50 percent vesting the following year.

The lucky employees that are deemed valuable should do well. Though we believe that Nokia will remain entirely independent and will recover a significant amount of its old stock value over time, even if the company is sold, both the options and the exec stock buys will pay off. Our only question is why Elop and the board members didn’t buy more.

Want to learn more about today’s powerful mobile Internet ecosystem? Then be sure to attend the Mobility Tech Conference & Expo, collocated with ITEXPO West 2012 taking place Oct. 2-5 2012, in Austin, TX. Co-sponsored by TMC Partner Crossfire Media the Mobility Tech Conference & Expo provides unmatched networking opportunities and a robust conference program representing the mobile ecosystem. The conference not only brings together the best and brightest in the wireless industry, it actually spans the communications and technology industry. For more information on registering for the Mobility Tech Conference & Expo click here.

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