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Value investing meets technology? NOKIA


Guest Bronco
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I am not a big technology investor.  In fact, in the past I wrote the only two I would invest in is Google and Apple.  These 2 have performed well, but quite frankly, I am too old/stupid/ignorant to invest in Akamai, Riverbed, or Micron.

 

But now I am looking at Nokia.  Pays a 4.5% dividend, and could be a cheap way to enter the wireless device movement on a global basis.

 

Any thoughts/comments appreciated.

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I think Nokia and RIM have serious long term issues.

With Garmin, MSFT, and WDC - I think the fears are overblown but not on the phone makers.

 

Harry is right about one thing. We are living in a winner take all world of oligopolies. I just got a blackberry and am not that happy with it. Its functional but lacks a cool / crisp factor. I miss my Windows Mobile phone and though I hate Apple the Iphone is pretty damn cool.

 

You will have 2 - 3 Smartphone leaders, and 2-3 cheap phone manaufacturers for the 3rd world.

 

Nokia needs to give up on Symbian and adapt Andriod. This is coming from a guy who had a Symbian phone in 2001.

 

 

With that said you could probably make money on it at some point / price.

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I'm not familiar with Nokia's markets in Europe, Asia, and Africa and the Middle East.  I think they traditionally have gotten a much bigger share of revenue from the EMAA markets than from North America.  So whenever I think about Nokia, it seems hopeless in the U.S. market but.....  they have traction in the RoW.

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I'm not familiar with Nokia's markets in Europe, Asia, and Africa and the Middle East.  I think they traditionally have gotten a much bigger share of revenue from the EMAA markets than from North America.   So whenever I think about Nokia, it seems hopeless in the U.S. market but.....  they have traction in the RoW.

 

agreed, but they may lose some of that advantage in EMEA in coming years.

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I think Nokia and RIM have serious long term issues.

With Garmin, MSFT, and WDC - I think the fears are overblown but not on the phone makers.

 

Harry is right about one thing. We are living in a winner take all world of oligopolies. I just got a blackberry and am not that happy with it. Its functional but lacks a cool / crisp factor. I miss my Windows Mobile phone and though I hate Apple the Iphone is pretty damn cool.

 

You will have 2 - 3 Smartphone leaders, and 2-3 cheap phone manaufacturers for the 3rd world.

 

Nokia needs to give up on Symbian and adapt Andriod. This is coming from a guy who had a Symbian phone in 2001.

 

With that said you could probably make money on it at some point / price.

 

blackberry has some great features but most of their phones are clunky. Almost every new blackberry I see is larger than 3 year old Nokia e71, but the BB's still have slower processor and slower app and camera performance. The nokia e71/72 are for sale for less than half the BB price as well.

 

I have a nokia. It has a nice hardware design and runs Symbian OS. It has pretty good apps available --- but I agree that it would be much better if it ran Android and could take advantage of all Android applications. Nokia has not created the best software or best phone operating system. Software is not their strong suit.

 

The risk Nokia faces in moving to Android OS is that their hardware design would be their only differentiating factor and this might give their product more severe competition from manufacturers like HTC.

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Value guys from different folds have been going on about Nokia for quite a while now. This far there hasn't been any money to be made (on the contrary). Personally, I think they fall on one of the first hurdles and that is predictability of earnings. Same problem as Apple, and as opposed to them they don't have pricing power or as strong a brand. I wouldn't care for them as long as they are traded substanitally above their own capital. Their market is still highly competitive and fast changing, and I don't see a good reason as to why they are the low-cost producer in 5, 10 or 20 years.

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I am not a big technology investor.  In fact, in the past I wrote the only two I would invest in is Google and Apple.   These 2 have performed well, but quite frankly, I am too old/stupid/ignorant to invest in Akamai, Riverbed, or Micron.

 

But now I am looking at Nokia.  Pays a 4.5% dividend, and could be a cheap way to enter the wireless device movement on a global basis.

 

Any thoughts/comments appreciated.

Have you looked at the financials? In an expanding market, revenue for Nokia fell last year and has continued to fall as of the last quarterly. Because earnings are falling, the dividend doesn't even look sustainable in the long-term. Maybe I'm wrong, but an investment in Nokia looks highly speculative at this point.
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  • 3 weeks later...
  • 2 weeks later...
  • 11 months later...

Nokia Stuns With Successful Strategy Against Apple:

 

http://www.forbes.com/sites/terokuittinen/2011/10/20/nokias-price-war-was-surprisingly-effective/?partner=yahootix

 

Nokia showed how you handle the weak period before a new product generation; with gritty sales aggression and hardfought share gains in some of the most competitive low-end markets in the world, India and China.

 

I would not shrug off the feat of eking out a tiny profit margin on 51 euro device ASP. That is genuinely impressive. Sony Ericsson has struggled to break at triple that ASP level.

 

The drastic price cuts across the ranges resulted in solid volumes in both smartphones and feature phones. Nokia not only delivered 107 million handset unit shipments in the quarter – it sold nearly 17 million smartphones while managing to eke out 4% non-IFRS device margin. This means Nokia was able to sell nearly as many smartphones as Apple during the quarter.

 

Just a week ago investors suspected that Apple would beat Nokia by 22 Million units vs. 14 Million units.

 

Hitting decent volumes by slashing prices aggressively is not the optimal strategy, of course. But this was the quarter before Windows models finally launch – and Nokia demonstrated it had the grit and savvy to boost its global handset market share with aging gear – profitably.

 

Since Apple's founding marketing and design genius tragically passed it is looking more and more like Apple will slowly turn into Microsoft and it will give Nokia a bigger opening  to be creative going forward.

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Nokia Stuns With Successful Strategy Against Apple:

 

http://www.forbes.com/sites/terokuittinen/2011/10/20/nokias-price-war-was-surprisingly-effective/?partner=yahootix

 

Nokia showed how you handle the weak period before a new product generation; with gritty sales aggression and hardfought share gains in some of the most competitive low-end markets in the world, India and China.

 

I would not shrug off the feat of eking out a tiny profit margin on 51 euro device ASP. That is genuinely impressive. Sony Ericsson has struggled to break at triple that ASP level.

 

The drastic price cuts across the ranges resulted in solid volumes in both smartphones and feature phones. Nokia not only delivered 107 million handset unit shipments in the quarter – it sold nearly 17 million smartphones while managing to eke out 4% non-IFRS device margin. This means Nokia was able to sell nearly as many smartphones as Apple during the quarter.

 

Just a week ago investors suspected that Apple would beat Nokia by 22 Million units vs. 14 Million units.

 

Hitting decent volumes by slashing prices aggressively is not the optimal strategy, of course. But this was the quarter before Windows models finally launch – and Nokia demonstrated it had the grit and savvy to boost its global handset market share with aging gear – profitably.

 

Since Apple's founding marketing and design genius tragically passed it is looking more and more like Apple will slowly turn into Microsoft and it will give Nokia a bigger opening  to be creative going forward.

 

sounds like slashing prices to move out bad product. creative?

 

When you are going up against the Apple juggernaut and everybody and his uncle is expecting a loss and huge market share declines and you have a soon to be dead OS before you ramp up your windows phones?

 

Against all of that Nokia lives to fight another day, yeah, I'd say its creative.

 

They have a long way to go but given the headwinds their unit shipments in Asia and Africa last quarter is very impressive.

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