Nokia's New Division to Improve Security - Analyst Blog

In a bid to enhance its security device and services, Nokia Corporation NOK has launched a full-time Security division.  The new unit will operate under the Mobile Broadband group – an important part of the company's Nokia Solutions and Networks (NSN) segment.

The Security division will offer a complete range of security solutions through an advanced workforce and superior technology. The company will also promote its security solution service by communicating the importance of security to different telecom companies.

According to Nokia's 2014 Customer Acquisition and Retention Study Report, 75% of customers believe that security is the operator's responsibility. The survey also revealed that a large number of mobile subscribers are willing to switch operators in case of security concerns, even if it calls for higher payments.

In the recently concluded first quarter of 2014, Nokia's revenues stood at $3,688 million, reflecting a stiff year-over-year fall of 15%. The NSN segment, which contributes 87% of the total revenue, also witnessed a 17% year-over-year decline in revenues.

In the last few months, NSN won major 4GLTE upgrade contracts from the likes of EE, a leading U.K.-based wireless operator, Algerian-based carrier Algérie Télécom, and Israel's Cellcom and Telenor. Hence, we believe that continuous contract wins coupled with the launch of such security products will certainly bolster the top line of the company while moving ahead.

Last month, Nokia completed the sale of its core mobile handset and services division to Microsoft Corp. MSFT. Nokia failed to sustain its smartphone business due to cut-throat competition from Apple Inc.'s AAPL iPhones and several innovative smartphones based on the Android software of Google Inc. GOOG. Post the divestiture, NSN has become the company's chief business division and accounted for highest share of revenue in the recently concluded quarter.

Nokia currently carries a Zacks Rank #3 (Hold).