It is a concern in a wider sense. I don't believe for a second that Cisco's earnings growth is any more assured than Nokia's, so within the industry, Nokia isn't overvalued. But not only are these overall industry P/E ratios flaky - people are starting to play mind games with each other. All this talk about PEG and "year 2001 P/E ratio" is a smokescreen. When you can't justify trailing earnings anymore, you start inventing new terms. As far as I know, you need a rotating singularity to build a time machine; you have to find a spinning black hole and learn how to manipulate the space-time matrix. Or something. And before that happens, any talk about even year 2000 P/E ratios is fantasy. Forecasting earnings is something Wall Street has never gotten right.
And yes, slacker, I did pop a blood vessel. Good thing we have universal health insurance in Finland. GSM is an Asian standard if you look at which country is adding 1,5 million subscribers a month these days - China. I think that the company which currently most closely resembles Motorola in 1995 is Motorola. There is one and only one mobile data upgrade for second generation networks that has generated substantial sales and that's GPRS. Nokia's total number of announced and unannounced deals now very likely tops 15. If you compare that to Lucent, Motorola and Nortel numbers averaging 2-3 deals, you see which companies are scrambling.
I'm not sure why you need to remind anyone that Nokia needs 3G. After all, when Nokia announced it is developing W-CDMA as a global 3G standard in 1996, people at SI did not even know what W-CDMA is. The press release from Helsinki posted at Nokia thread back then was dismissed as vaporware. That was how out of the loop most investors were about 3G when it was already a subject of intense R&D effort in Finland. I hardly need to point out that GPRS was also completely dismissed in USA last spring.
Right about now, GSM has 51% of world's subs, CDMA has 10% and TDMA has 7%. Three interesting points: announced TDMA network sales are growing rapidly and announced CDMA network sales are shrinking. According to research data, quarter-to-quarter CDMA handset sales growth was unable to pull ahead TDMA handset sales growth. GSM and TDMA are starting to converge next year.
So the question isn't whether CDMA will pull anywhere close to GSM in subscriber base or handset sales. The question is whether it can handle even the TDMA competition. Slacker - if you have another opinion, how about naming one independent research report that disputes the three claims above? Articles from "San Diego Tribune" don't count.
Tero
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