It's not a relevant question... is the most correct answer.
I don't CARE what the parts are or might be worth ? Because... the parts don't benefit me ? And, what they might be worth is a variable... that depends on lots of things that are unknowns... and only more in relation to considering what has to happen before the values of the parts will be being realized ?
So, the most correct way for me to answer that properly is...
I determine my interest in trading from charts... caring about the TA... and alternatives in other choices.
I determine my interest in investment... by doing the DD... caring about fundamental analysis... and, timing.
I also am aware enough to consider synthesis of the fundamentals and market dynamics... ?
Start with the DD ?
I have a three step initial DD process... developed from years of experience... and now reduced to this list, in the sequence it is, for reasons that cost me a lot of $ in learning and relearning obvious lessons:
1. Can you trust management ?
2. Is the value attached to the shares ?
3. Is the value real, and realizable for shareholders ?
If the yes or no answer to any question is "no"... then, the most correct answer is that you should exit the checklist and look for another prospect... or, wait for change to occur, project when it will, etc., or, just hang out waiting for the inevitable, to laugh at those who thought the method in that bit of madness I've devised... wouldn't matter ? I tend to favor the first and lean toward the first two, rather then the waste of time in the third.
Becoming more and more cynical with time in the market, my latest DD innovation is to recognize that the only correct answer to the first question... is always yes... it's always just a question of "how much" and what you can trust them to do... whether that is to manage well and succeed, stumble and fail, or to scam you every way they can... or, only in the one way that matters. Can you trust them to be brilliant and innovative ? Or, stupid as a box of rocks ? Etc.
FWIW, the NOK checklist result is...
1. A proper question... but, TBD... in the "what can you trust them to do" department. I think Elop has a learning curve, but, I suspect it's not an overly useful one, and it seems unlikely to overcome the baggage he brought with him from a corrupted bureaucratic corporate culture. I think you can probably trust management to continue to perform basically as they have... including that meaning NOK will continue to show the "disconnects" in the relationships between things and the market they have... between the effort and the requirement... in the need versus the result in timing... etc. I think there is a basic set of competence issues... span of control issues... and we see a result in things looking disjointed.... not properly in synch. Why will that change ? Elop is long since "all in" betting on W8... but, he seems to be the only one who thinks there's a poker game goin on.
So, I've said I think we'll likely see NOK whiff this fall, in the way they have on other challenges... because that's what they do. I think I've been clear that I think there MAY be an opportunity for bottom fishers AFTER the recognition events I expect... but, then, there will also be larger risks then, than there are now...
So, wait and see what happens...
Anyone doubt that if W8 doesn't do it for Nokia... Elop will be looking for work ? And, then, we'll get a chance to attack the first question all over again...
2. Yes. But, with the caveat that whatever they intend, the wheels coming off the business mean that becomes less true over time, and you have to think in terms of where the puck will be. So, the value of the parts issue becomes more relevant when the wheels ARE coming off... but, again, when you ARE there... you will have fewer assets and larger liabilities than you do now... making the math done now not realistic in current valuation... including that the risks and time pressures growing when the wheels ARE coming off, means "less value" for things you might value at X now... If you tell me NOK is going to liquidate next week ? Maybe I can come up with a wag. If you tell me that value will be reserved until after the next market debacle is realized ? What will the market for "used parts" look like then... with the additional mileage on the parts in question ?
3. Yes. NOK has value, still, in the potential they'll make a go of things and turn them around... but, that value is a dynamic that is a larger variable even than that imposed by the dynamic in their market...
If they turn things around... shareholders will benefit. If they don't, the answer changes...depending on timing, and a host of things we can't know now. BK or no BK ? Or, asset sales... to generate cash... that the company continues to burn through at the same pace at which they dispose of the assets ? Etc.
The discussion isn't different than handicapping a ballgame or a series of games that havn't been played yet... based on having seen the team play for the last two seasons. I'm not expecting NOK to beat the teams they've been playing and losing to the last few years, winning instead this fall, all of the sudden, only because the "same old" coach they have... has been there a year longer... ? I have yet to see anyone explain, rationally, instead of by rationalizing... why anything is different this time ? It's another chance, like another coin flip is another chance ? I expect more of a management than having a basic awareness of the calendar... showing them counting down to the next coin flip... hoping to get lucky this time...
I don't think MSFT is the NOK ringer Elop expects, either... and, in fact, they may see it very much as I do... and might be playing this round already... just angling for position in relation to some of the "parts"?
IF that proves correct... there may be rabbits out there lurking in hats, still... but, then, you still need to pair up the rabbits, and the hats, with a magician ? And, then, value depends on what happens next ? Deals... won't be valued based on what I guess things are worth today ? I can't know whether a new management... hired by the same people who hired the old one... will be better than the old one ?
Bottom line... answer to the first question is a solid ... ???... even if it is a ??? with a negative bias, that I expect might be resolved at some point... perhaps within the next few months.
So, my DD effort continues until there is a resolution... I'll find it useful to pay attention... I won't find it useful enough to do anything about it, beyond continuing to observe...
I might trade the chart... if, for some reason, the other things I'm looking at don't show anything better... and that still won't depend on the checklist, anyway...
Otherwise... an investment decision awaits a positive result from the checklist... period. |
