What's up guys and welcome back to wall street millennial on this channel, we cover everything related to stocks and investing today we're talking about the finnish telephone and telecommunications company nokia. Nokia is most well known for its namesake cell phones, which dominated the global market in the late 1990s and early 2000s at the height of the tech bubble. In 2000, their stock price peaked at close to 60 dollars, giving them a market cap in excess of 200 billion dollars that made them the most valuable company in finland by a huge margin, but they failed to adapt to the smartphone era and by the mid-2010s they Had lost substantially all of their market share to the likes of apple and samsung, today, you're more likely to see a nokia phone in an internet meme than in the real world. Unsurprisingly, their share price evaporated, along with their market share and fell by 97 from 2000.

Through 2012., most analysts wrote off this company as a dinosaur and predicted an eventual bankruptcy, but against all odds, the company has mounted an impressive turnaround by completely reinventing their business model. Shares have rallied more than 200 from the lows while they still haven't recovered. Their tech bubble highs. Their current market cap of 32 billion dollars has allowed them to reclaim their title of finland's most valuable company in this video we'll go over how nokia came to dominate the mobile phone industry, how they became obsolete and, finally, how they were able to make a comeback.

Nokia can trace its roots all the way back to 1865. When finnish engineer, frederick idestam opened up a paper pulp mill over time, he expanded the business by opening up more mills. That would turn wood into paper and eventually named the company nokia. While they started off making paper, they weren't afraid to apply their engineering expertise to other industries throughout the 1900s.

They expanded into electricity generation, rubber, manufacturing and other industries which were considered high-tech at the times. They first got involved in the communications business when they created the sunomelite m19 digital communicator. It was used by the finnish military to send and receive encrypted messages. At the time ceo carrie caromo saw the potential of the nascent telecommunications and technology industries.

He went on an acquiring spree to enter the television, microcomputer and even personal computer industries, but their most significant acquisition was of telephone company mobira 1982. They launched the mobiro senator cardphone, a mobile radio telephone that could be fitted into an automobile. It was cutting edge at the time as it allowed people to make and receive phone calls without a landline, but the market was still immature and these phones only contributed an insignificant amount of revenue to the company. Most senior executives didn't take them seriously and spent most of their time focused on the older industrial businesses.

But this all changed when jorma olila took over as ceo in 1992. Jorama is widely considered to be the most important man in nokia's, modern history, and he has sold off their old industrial businesses and turned nokia into a completely telecommunications focused company. In 1987, they created their first modern mobile telephone called the mobira city man. It was the large brick style phone, but at the time it was one of the most advanced consumer product offerings on the market, and it was an immediate commercial success.

Throughout the 1990s, they launched dozens of new phones with each one becoming smarter than the last around the time of the tech bubble. They were already launching internet connected smartphones, which you could use to check your email, but not much else. This was enough for them to become the largest mobile phone producer in the world selling their 100 millionth cumulative phone in 1998.. Around this time, their valuation peaked to almost 60 dollars per share.

They had a market cap in excess of 200 billion dollars, making them the largest company in the history of finland. In fact, they represented close to 70 of the total market, capitalization of the entire helsinki stock exchange, and while their stock price did fall, when the tech bubble burst their business continued its strong growth. Throughout the 2000s, they launched dozens of innovative phones which captivated consumers across the world. For example, in 2003 nokia launched the 3650, which had its numbers displayed in a circle reminiscent of old-fashioned turndow phones.

Despite this design throwback, it was on the cutting edge of technology. Being the first camera phone on sale in north america, the nokia 7600 was an oddly shaped phone geared towards kids and the nokia n90 was able to tilt and fold for better picture taking. In 2007, they launched the n95, which was one of the most advanced phones. The world had ever seen up to that point: it boasted internet connectivity, a 5 megapixel camera and the ability to support games from third party developers.

The n95 was a major success and they reached a staggering 51 billion euros of revenue and almost 8 billion euros of operating profit. They also expanded into the mobile network infrastructure business in 2006, with a joint venture with siemens. They eventually bought out siemens stake and rebranded. It as nokia networks, but their glory days, didn't last long.

They were hit hard by the 2008 financial crisis, as people lost their homes and jobs they cut back on their discretionary spending. Expensive smartphones were one of the first items on most people's chopping blocks. Their revenue fell by 20 in 2009, while recessions are temporary. Nokia was facing a far greater threat that would ultimately spell its downfall.

In 2007, apple launched its revolutionary iphone, which replaced the qwerty keyboards of traditional smartphones with a giant multi-touch screen. The display and user interface of the iphone was far superior to that of the nokia phones, as it allowed for a diverse set of third-party applications and games with the introduction of the iphone nokia phones became an inferior product at a similar price. Their market share started tanking from over 50 of global shipments in 2008 to the low single digits in 2012.. They tried to turn things around by copying apple's touchscreen design with the nokia n8, but they lack the technical expertise to match the performance and ease of use of the iphone over the 2000s nokia's upper-level executives became complacent in their dominant market position and grew lazy.

They under-invested in r d such that by 2010 they had no chance of competing with apple or samsung. This became especially evident when they delayed the planned launch of their phone multiple times as their engineers were struggling to fix, bugs and glitches. Also, all of nokia's smartphones ran on their proprietary symbian operating system as they lost market share. Fewer and fewer third-party developers wanted to waste their time, making apps for symbian.

They instead focused on the apple and android operating systems. This led to a vicious cycle of lower market share and an increasingly barren app store. The finished giant which had dominated the market for the past 20 years had been relegated to a marginal player in the span of just four years. By 2012, their revenue had been cut almost in half from 51 billion euros to 30 billion, their smartphone revenue declined much more than this, and they were only safe from bankruptcy by their telecommunication equipment, business, which was relatively stable.

However, the smartphone business was far more profitable than the equipment business. With their dramatic loss of market share. They went from being profitable to losing billions of euros per year. Their stock price began free-falling and by 2012, many analysts were predicting bankruptcy in light of the disastrous financial performance.

Nokia's board of directors fired the existing ceo and replaced him with former microsoft executive, stephen elof, shortly after they abandoned their symbian operating system in favor of the new microsoft windows mobile os. But by this point, apple and android were too far ahead and the windows foams were a major flop. Things were starting to get desperate for nokia. They were losing billions of euros per quarter and would face bankruptcy within a few years.

At that rate, they were saved in 2013, when microsoft agreed to buy their money, losing mobile phone division for 5.44 billion euros or about 7.5 billion dollars. While this sale was necessary, it was also gut-wrenching for long-term nokia shareholders, as this business was probably worth more than 100 billion euros 10 years ago. With this divestiture, their revenue was cut more than in half overnight. All that remained was their nokia networks, business, which creates telecommunications and data networking equipment.

They produce hardware and services to telecommunications companies to build and maintain their mobile network infrastructures being able to focus purely on their network equipment business. They started to see some success in 2014. They signed a 970 million dollar deal with china mobile the world's largest telecommunications company to supply them with equipment. Slowly but surely their net profit started to increase and it looked like.

The company was back on track by 2015. It had become clear in the industry that 5g was the future. Nokia needs bolster its capabilities to produce 5g network infrastructure. At this point, the two most capable companies in terms of 5g were the swedish company ericsson and the chinese company.

Huawei nokia was a distant third to remedy the situation. They acquired rival french telecom equipment, maker, alcatel lucent for 15.6 billion euros in an all stock merger. By combining the intellectual property and r d resources of the two companies, nokia would become one of the market leaders and by 2018 it looked like their focus. On 5g was starting to bear fruit.

They signed their first 5g infrastructure supply deal with japanese telecommunications company. Ntt docomo ntt is the largest mobile phone carrier in japan, with over 50 percent market share, but despite winning a few high-profile deals, nokia has found it difficult to compete with huawei, which arguably has the most advanced and cost-effective 5g infrastructure. The chinese government also uses its negotiating leverage to convince many countries within the belton road initiative to exclusively use huawei infrastructure. Fierce competition from huawei caused nokia's revenue to gradually decline since the alcatel merger in 2016..

However, former us president donald trump may have thrown them a lifeline in 2020 trump went on a crusade against huawei, saying the chinese government could use the company's infrastructure to spy on military and government personnel in response he banned huawei from bidding on 5g network contracts. In the us and convinced many european countries to do the same, huawei dominates the 5g market in most of asia, south america, the middle east and africa. Many of the countries in these regions have good relationships with china due to the investments under the one belt. One road initiative - the countries colored in red - have banned huawei.

These include the us uk, sweden, poland, romania, australia and japan. In many other western countries, there is no explicit ban on huawei, but their governments have urged telecommunications companies to avoid using chinese suppliers. This means that in many western markets, nokia occupies a duopoly with ericsson. In fact, we're already starting to see this play out to some extent.

This october taiwan mobile chose nokia as its core provider for advanced 5g infrastructure. Given the escalating tensions between the two countries, it's no surprise that they chose nokia over huawei. Nokia may also benefit from deteriorating diplomatic relationships between china and india, as india recently banned huawei. The finnish company is currently conducting 5g trials in india and has a much greater chance of winning big deals now that they don't face chinese competition.

In the second quarter of 2021, they reported 9 constant currency growth, which is one of the highest growth rates they've recorded in recent years. It doesn't look like huawei will be able to repair its relationship with the western world anytime soon, so nokia could stand to benefit for many years to come, and while the 5g network business appears to be taking off, the nokia brand is also starting to make a Comeback in the mobile phone market after microsoft bought nokia's mobile phone business in 2013, they mismanaged it as they lacked expertise in this area of technology. The acquisition was largely considered to be former microsoft. Ceo steve ballmer's biggest mistake.

In 2016, they sold the business to a newly formed company called hmd global for 350 million dollars. This is about 95 percent less than the 7 billion dollars that they originally paid for it. Hmd global was founded by a former nokia executive who thought that the nokia brand still had value and wanted to revitalize it. While hmd is an independent company, they still use nokia's patents and technology and nokia earns a royalty for every nokia branded phone that is sold since 2016.

They have released multiple nokia branded smartphones, which have gained critical acclaim for their quality and durability. Nokia phones are best remembered for being nearly indestructible. Staying true to the nokia reputation hmd developed the xr20, which is waterproof and can be dropped from high distances without breaking and with a price point of about 600 dollars. It arguably offers a much better value proposition than apple or samsung phones.

One of the biggest factors that contributed to nokia's downfall in the early 2010s was their proprietary symbian operating system, which only supported a small number of apps. Now, all of their smartphones run on the android operating system and can support all the apps on the google play store. Nokia is one of the most interesting turnaround stories in business history. They went from being the largest phone maker in the world to the brink of bankruptcy in 2012, and just when analysts were writing them off as obsolete, they were able to snatch victory from the claws of defeat and emerge as one of the global leaders in 5g Infrastructure, alright guys that wraps it up for this video.

What do you think about nokia? Do you own a nokia phone? Let us know in the comments section below as always. Thank you so much for watching and we'll see you in the next one wall, street millennial, signing out.