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

Head to head: Apple versus Nokia. Which is the better stock to buy?

Apple (AAPL) crushed Wall Street estimates when it reported earnings on July 21. Earnings per share for the company’s fiscal third quarter grew 13% from the third quarter of 2008. Revenue grew by 12% in a quarter when almost no company is reporting any sales growth.

Nokia (NOK), on the other hand, stunk up the joint with its second quarter results announced on July 16. Earnings per share did meet expectations but that was the last piece of good news that the cell phone maker delivered. Revenue missed projections by 3.8% and plunged 24.6% from the second quarter of 2008. Unit volume fell 15% from the second quarter of 2008. And the company took back its forecast that it would pick up market share in 2009. Now Nokia is saying its share will stay flat this year.

So which of these two stocks is a better buy? It’s not as easy a decision as it looks. Read more