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 Nokia (NOK)
Nokia (NOK) has put in a bid to be the other cell phone maker besides Apple (AAPL) to make a profit and have control over its business.
Now if the company could just get its new phone, the E7, out the door.
The success of Apple’s iPhone is built on the extraordinary power that controlling both he software and the hardware gives Apple. The company can make sure everything works together because it decides what gets on the platform and what doesn’t. No lame pre-installed apps from cell phone service providers. No word processing software that works differently in different programs on the same phone. No graphics that just kind of work.
Nokia is aiming for the same business model.
In early November the company decided to take full and sole control of the Symbian operating system for smart phones. To a degree Nokia had no choice. Its partners in the Symbian Foundation, set up to oversee the software, Samsung and Sony-Ericsson had abandoned the platform for Google’s Android. But Nokia decided that it would make the best of the hand it had been dealt: by taking over full control of the software, the company could customize the next version of the software for its next products and use it to develop a next generation operating system called MeeGo.
MeeGo is still scheduled to be introduced in 2011, but on December 14 Nokia announced that its new smart phone, designed to close some of the smart phone gap with not just Apple, but also Samsung and HTC, would miss the Christmas buying season completely. The phone wouldn’t hit stores until early 2011.
The delay isn’t a killer for either the E7 or for Nokia but it sure doesn’t do anything to help the company to regain momentum in the market. Read more
Update Nokia (NOK)
It’s a first step, but only a first step.
On September 10, Nokia (NOK) named Stephen Elop to replace Olli-Pekka Kallasvuo as president and CEO.
In Kallasvuo’s four years at the top of the company, Nokia lost market share to Apple’s (AAPL) iPhone and other smart phones as the company seemed unable to bring a competitive phone to the consumer market. He pushed the company to develop services such as music downloads and GPS navigation but couldn’t gain much traction against Apple and Google (GOOG) in the services segment. Nokia trades at roughly 15% of its 1999 peak market value. The shares are down 60% since Apple’s 2007 introduction of the iPhone.
Elop, a Canadian, will be the first non-Finn to run Nokia. He was most recently at Microsoft where he headed the unit responsible for Office. Before that he was chief operating officer at Cisco-competitor Juniper Networks (JNPR). He was CEO of graphics software company Macromedia before it was acquired by Adobe Systems (ADBE).
How good a pick is Elop considering that Nokia’s biggest needs are in developing software and apps stores to compete with Apple and Google, and coming up with as smart phone that will create some consumer buzz? Read more
