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Technology Stocks : Nokia (NOK)
NOK 5.920-1.9%1:58 PM EST
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To: Mephisto who wrote (2481)10/9/1999 7:51:00 AM
From: tero kuittinen  Read Replies (1) of 34857
 
I think we need to define the term "flounder" here. Nokia was below 30 dollars one year ago. Are we really at the point where tripling the share price in twelve months is a source of worry? I don't see there is a realistic chance to get that performance evenly distributed over all four quarters. You can't accurately predict when the run-up happens and when the consolidation follows. That second quarter fall-out is a good example of how hard it is to consistently surprise Wall Street. The handset sales growth didn't top 60%, as many expected. Apparently that was enough to put off many institutions.

The new product launches and the Geneve meeting are good reasons to expect the run-up to continue during next week. But I wouldn't bet that 3Q numbers are good enough to sustain the rally. Nokia is now launching 8860, 8850, 8210 and 7110. That's four demanding, expensive new models that each represent some kind of a break-through. North American market gets the first tri-mode phone at 100 grams, GSM-900 markets get two different dual-mode follow-ups for 8810, 6100 series gets a WAP-replacement. That's a tough program - and much of the costs fall on third quarter while sales begin during the fourth.

So it's a question of trying to figure out how Wall Street will react if handset profit margins don't clear 23%. Is the focus already on fourth quarter and new high-margin models? Has 3210, the new key low-end model already shipping in volume, already taken up the slack that the 6100 and 5100 price cuts are creating? I have a lot of respect for people who can predict the reaction to these quarterly issues accurately. Too bad I've never met one.

Tero

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