Update Nokia (NOK)
Watching the stock market right now is like watching paint dry.
Only not quite as exciting and with decidedly more side effects.
But while stocks aren’t going anywhere lately, some companies are. And it’s important to track which companies are taking steps now to make themselves stronger for the next spurt of growth in the global economy and which companies seem immobilized by current tough conditions.
I’d put Nokia (NOK) in the first group. Oh, the company hasn’t managed to solve its iPhone or Blackberry problems. Nokia’s smartphones are still the laggards in the U.S. market.
But the company does seem, finally, to understand that it’s long-term business suicide for the world’s largest cell phone company to be an afterthought in the U.S. market. Business 101 says that you don’t let competitors have a big and profitable market to themselves so they can use profits from that market to attack your core markets.
I’d call Nokia’s move ground work that builds a foundation for Nokia to play a bigger role in the U.S. market. Sometime in the future when the company has a competitive smartphone model.
Sell Marvell Technology Group (MRVL)
I’m going to use today’s bounce to sell Marvell Technology Group (MRVL). I don’t know how long this bounce will run—it could go to 1220 or so on the Standard & Poor’s 500 or be truncated by investors selling into strength—but I would like to lighten up on technology for the summer quarters. Marvell Technology is the most volatile of my tech holdings. That will be good news when the group rallies but right now it exposes me to more risk than I’d like. (For more on my short-term take on the market see my post http://jubakpicks.com/2010/05/26/and-the-best-lack-all-conviction-the-odds-are-against-u-s-stocks-holding-alone/ )
The company reported good earnings after the close on May 20 beating analyst estimates for 37 cents a share by a penny. Revenue too came in above the consensus of $845 million at $856 million. That was a 64% increase from the first quarter of 2009.
The company even upped its guidance for the second quarter. Earnings, the company projected, will be in a range from 38 cents to 43 cents per share (consensus before the revision was 36 cents) and revenue will be $900 million to $930 million (consensus was $865 million.)
That earnings news produced an 8% pop in the stock on the next trading day but since then it’s been pretty much What have you done for me lately?
Buy American Tower (AMT)
I almost bought American Tower (AMT) for Jubak’s Picks on Friday. But the stock was hovering just below its 200-day average and I was afraid that a continuation of the euro debt crisis would push the stock below that support level. Instead of more crisis, however, Monday has brought a huge relief rally based on a $1 trillion rescue plan worked out by European Union leaders over the weekend. So I missed what I believe is the local bottom on Friday, but on Monday, with Friday’s risk reduced, the stock is still a great buy, in my opinion.
American Tower is in the business of building towers and then renting space on that tower to wireless companies. The profitability of a tower depends on how many sites on a tower American Tower can rent. With the current explosion in wireless data and broadband service, wireless companies need more tower space.
Sell Qualcomm (QCOM)
You’ll pardon me, I hope, if I’m nervous heading into Qualcomm’s (QCOM) earnings announcement for the second quarter of fiscal 2010 on Wednesday, April 21. Last quarter Qualcomm shares dropped 14.3%–or $6.72 a share–on January 28, the day after the company released earnings for the first quarter of the 2010 fiscal year and announced guidance for future quarters. In its guidance Qualcomm executives predicted lower than expected revenue and earnings for the second quarter.
Since then the company has restored most of the decrease it predicted three months ago. But Qualcomm has a record of delivering earnings surprises—and the surprises aren’t always pleasant.
Palm is for sale–RIMM, Apple, and Google crush smart phone pioneer
Palm, a pioneer in what turned into the smart phone market, has hired Goldman Sachs and Qatalyst Partners to find a buyer, according to Bloomberg.
Leading candidates, Bloomberg reports, are Taiwan’s HTC and China’s Lenovo Group (LNVGY). Lenovo recently repurchased its former mobile phone business from the group of former employees who had bought the unit in 2008 when Lenovo decided to concentrate on computers.
Palm shares were up 16.7% as of 12:30 ET this morning, April 12. Shares rose 32% last week on rumors of a takeover bid. The stock had been down 60% for 2010 before the recent moves.
Palm, No. 6 in the North American smart phone market in the fourth quarter of 2009, had bet a turnaround on its new Pre and Pixi smart phones based on its new WebOS operating software. But sales have been disappointing.
