The market was taken by surprise by the Nokia (NOK) Q4 sales update. The company had built quite a reputation of missing estimates and warning down over the last 2 years.
In my article from October last year, I predicted a 300% potential, based on the second wave of smartphone adoption. A third of that potential has now been realized. It is tempting to take money off the table after such a fast rush. Although some short-term profit-taking is possible, the long-term potential is still intact. Since the summer, Apple's (AAPL) stock has lost around $100 billion in market cap, while Nokia's has gained only $4 billion. That puts the stock recovery in perspective.
Why the excitement about 4.4 million Lumias
Nokia missed the first inning of the smartphone race completely. The market has counted them out for the smartphone race and the company was priced as it would slowly bleed empty and lose its customers to Apple, Samsung, Research In Motion (RIMM) and maybe even HTC. AppleOS and Android (GOOG) would divide the cake as Nokia was held up in the locker room. Over 2011, the company sold only 1 million Windows 7 phones. This led to significant losses as the operational scale was too low.