Aug. 1 (Bloomberg) -- Nokia Oyj, the phone maker struggling to stem losses amid plunging revenue, had its biggest seven-day gain in almost 20 years in Helsinki trading following stronger sales of its flagship handset and share purchases by top managers.
The stock surged 6.2 percent to 2.07 euros, extending it’s seven-day gain to 46 percent, the biggest such increase since 1992. Nokia has risen 51 percent since July 18, the day before the company reported sales of its Lumia smartphone series that beat analyst estimates.
Executive Officer Officer Stephen Elop bets on the Lumia, which runs software from his former employer Microsoft Corp., to halt market share gains by Apple Inc.’s iPhone and handsets using Google Inc.’s Android software. Nokia, based in Espoo, Finland, said this month that sales of the Lumia phone increased to 4 million units in the second quarter from more than 2 million in the previous period.
“Perhaps this is the beginning of a recovery for Nokia.” said Jean-Michel Salvador, an analyst at AlphaValue in Paris. “There is hope that sales might continue to grow also with the release of the new Windows phone.”
Microsoft is set to release its new Windows 8 computer operating system in late October. The company has also announced a mobile version of the software, called Windows Phone 8, though it hasn’t said when that will be available.
Elop and several directors bought more than $1 million of Nokia’s shares as a sign of “commitment to Nokia and confidence in our future,” the company said yesterday. The company has announced more than 20,000 job cuts and shuttered production and research sites as it tries to offset declining revenue.
Still, since the July 19 earnings report, short positions on Nokia shares have increased 11 percent, with 16 percent of total shares outstanding currently shorted, according to Markit data. Relative to supply, the demand to short Nokia’s shares has never been higher, with 79 percent of the available short supply currently on loan, the data shows.
The cost of insuring Nokia bonds using credit-default swaps has declined, falling 15 percent since the record high on July 18, according to Bloomberg data. Credit-default swaps pay the buyer face value if a borrower fails to meet its obligations, less the value of the defaulted debt. A basis point equals $1,000 annually on a contract protecting $10 million of debt.
To contact the editor responsible for this story: Kenneth Wong at firstname.lastname@example.org