Buy Nokia (NOK)
You sure can’t say Nokia (NOK) isn’t pulling out all the stops to win back market share.
The company has announced that its U.S. retailer AT&T (T) will start selling its Lumia 900 smartphone, running Microsoft’s (MSFT) Windows Phone operating system, for $99.99 on April 8. That pushes the price (with a two-year contract) to half of the cheapest iPhone and Android phones.
On March 28 Nokia announced that starting in early April its Lumia 800C will be available from China Telecom (CHA). In the second quarter the company’s Lumia 900, 800, 710, and 610 models will be sold by China Unicom (CHU). A phone for China Mobile (CHL) is still in the works.
At the end of February Nokia made its first ever appearance at the annual Mobile World Conference in Barcelona where the company introduced six new phones built on its new Microsoft Windows Phone operating system. Not bad for the first year of the company’s new partnership.
Does all of this mean Nokia is back?
No way. At least not in 2012. The company is still bleeding market share in both the high-end smartphone market and in the mid-level feature phone market. The company’s share of the smartphone market could fall to 6% by mid-2012 from an already depressed 12% at the end of 2011. Operating margins are still falling and revenue is forecast to decline again in 2012.
But there are signs that new CEO Stephen Elop could see his strategy stabilize market share in 2013 with about 13% of the global smartphone market. That’s not enough to make Apple (AAPL) or Samsung quake in their boots or to restore Nokia’s stock to the $14.21 it sold for on April 6, 2010 or the $34.51 of November 6, 2007), but I can see $7.80 a share in a year. That would be a 44% gain from the March 29 price of $5.42.
Which is why I’m adding Nokia to my Jubak’s Picks portfolio today, March 30 http://jubakpicks.com/the-jubak-picks/
Why does Nokia stand a chance of recouping even that much of the market and its share price? Read more
Yes, the NASDAQ is higher than it’s been since the tech bust of 2000, but this is a different and much healthier technology sector
The NASDAQ Composite Index broke 3,000 on Tuesday, March 14, for the first time since 2000. The 11-year high for the index brings back memories of those days in 2000 when the dot.com bubble pushed the technology-laden index to a high of 5,048.62. (The 500 or so technology stocks that trade on the NASDAQ market account for almost 50% of the market-capitalization weighted index.)
But breaking the 3,000 level isn’t either a signal to put the champagne on ice so it will be chilled when it’s time to celebrate the NASDAQ hitting 5,000 or to run in fear yelling “The sky is falling again.”
Truth is, this isn’t your father’s technology sector. We’re not headed to the moon or into the abyss. Which is why even at 3,000 this is a good time to invest in technology stocks. As long as you understand the big differences between the current technology market and that of 2000.
I can think of four major differences. Read more
To find technology bargains you have to look past the low PEs of behemoths like Microsoft and Cisco
I keep hearing that technology shares are cheap.
The numbers seem to back that up. “Seem.”
Computer stocks trade for just 9.3 times reported earnings before interest, taxes, depreciation and amortization (EBITDA), according to Bloomberg. That’s just 1.3 times the multiple for the Standard & Poor’s 500 stock index for a whole. And that’s the smallest premium for computer stocks since Bloomberg’s data begins in 1998.
The price to earnings ratio for the companies in the information technology sector as compiled by Standard & Poor’s is just 14.8. The multiple for the entire index is 14.7. The 14.8 multiple for the information technology sector is the lowest multiple since December 2009.
And if you want to talk individual stocks, the numbers seem to make the argument even stronger. Cisco Systems (CSCO), one of the technology names to conjure with for decades, trades at a price-to-earnings ratio of just 11.5. Intel’s price-to-earnings ratio is just 10.2.
But, I’m sorry, I just don’t buy it.
I think technology stocks as a whole are pretty accurately priced. The big companies that dominate the sector, the names we all recognize, may even be slightly overpriced. And the true growth companies in the sector may be attractive buys on their growth but they sure aren’t cheap on their price-to-earnings ratios.
I think the whole “Technology stocks are cheap” argument fails to understand exactly how much the technology sector has changed from the good old days and how sweeping the revolution is that is now turning the sector upside down.
Let’s take a look at the assumptions in the technology is cheap argument. Read more
Update Microsoft (MSFT)
Microsoft (MSFT) reported fiscal second quarter earnings on January 28.
The really good news for investors was what wasn’t in the blowout numbers. And what’s happened to the company’s business since then.
The second quarter results were good enough on their own. (Microsoft’s fiscal year ends in June.)
The company reported earnings of 60 cents a share. Once you added back in $1.7 billion in deferred revenue and about 14 cents a share in earnings from sales of Windows 7 that Microsoft decided it would recognize in future quarters the earnings picture looked even better at 74 cents a share. Wall Street analysts had included that deferred revenue in their estimates of 59 cents a share for the quarter. That made this is a 15 cents a share earnings surprise.
The company attributed the surprise to better than expected sales of its new Windows 7 and Windows Server 2008 R2 software launched in October. Through the second quarter Microsoft had sold 60 million Windows 7 licenses, making it the fastest selling operating system in history, according to the company.
But what’s really interesting for investors who want to know not what Microsoft did in the quarter but what the stock might do going forward is that the company reported it still hadn’t seen a significant contribution to sales from corporate—known as enterprise—purchases of Windows 7. Read more
Google’s earnings are good news–let me count the ways
Google’s (GOOG) good earnings news is an indicator of something, but just what?
On October 15, after the market close, Google reported earnings of $5.89 a share, 47 cents a share above the consensus estimate of $5.42. Revenue, after traffic acquisition costs, climbed 8.4% from the third quarter of 2008. That was about $160 million ahead of the Wall Street consensus of $4.24 billion.
But what do the numbers mean? Read more
