Nokia In Handset Heaven
Mark Lewis
Forbes
12.02.02
Nokia investors are eagerly waiting for Tuesday morning, when Chief Executive Jorma Ollila is scheduled to deliver his annual pep talk to Wall Street analysts--and presumably to provide evidence that justifies his stock's 80% gain since mid-summer.
But investors who are not inclined to wait will find plenty of encouragement in a research note issued today by Adnaan Ahmad, who covers Nokia for Merrill Lynch. Ahmad, who previously had projected that 410 million handsets would be shipped in 2003, has decided that pent-up demand for upgrades is greater than he thought. Now he estimates that the market will call for 474 million handsets next year and 501 million in 2004.
Handsets shipped globally totaled 384.2 million in 2001 and are estimated to total 391 million this year, according to market researcher IDC.
"We believe Europe is the major replacement market in 2003, with subscribers waiting to replace their handsets with new color/camera capabilities," Ahmad said in his note. "In this market, Nokia commands a disproportionately higher market share and, with its compelling product portfolio being introduced across all market segments over the next few months, we anticipate its market share continuing to rise in this market region."
Ahmad raised his 2003 earnings estimate by 41% to €1.02 per share and bumped his rating on the stock to "buy" from "neutral." Investors promptly bid Nokia up another 5% in morning trading to top the $20 mark. Investors clearly expect to hear glad tidings out of the Dallas investor conference, which begins this afternoon, when Ollila takes the stage Tuesday.
The market seems increasingly enthusiastic about wireless, especially in Europe where hopes have been kindled that the decline in capital expenditures is bottoming out. "I think the general mood of optimism that's there is due to the fact that revenue growth from mobile operators continues to be double-digit," Matthew Lewis of Daiwa Securities told Reuters. "Capital expenditure is designed to support future revenue growth."
That optimism may be premature. Still, there is no denying that investors' moods have improved mightily, to the obvious benefit of such beaten-down wireless-equipment stocks as Ericsson.
Nor is this era of good feelings confined to Europe. Nortel Networks was the Big Board's most active issue by far this morning, up a sturdy 15% on the news that it had won another contract to supply wireless equipment to China Unicom. Motorola and Siemens also were sharply higher.
Investors hope Ollila says nothing to break the spell. He probably will not disappoint them. |
