I don't think there's any bad news applying specifically to Nokia. Asia spinning lazily out of control will get all of the tech stocks sooner or later. Ericsson got some good infrastructure deals, which is probably slowing down its drop. Motorola has already lost almost 50% of its recent peak, so it has little to lose. Nokia, however, recently hit its all-time high of 70 dollars, so it's coming down hard from those heights.
I think a worldwide depression right now could be a good strategic move for Nokia. After a string of setbacks, Motorola's last card is Iridium, a half a kilogram phone costing nearly 3 000 dollars and not operating indoors. They will launch the phone next September, probably the worst time to launch a luxury product in Asia since the bombing of Nagasaki. So much for Asian sales. In Europe, business execs have just gotten used to the idea that a mobile phone will fit their shirt pocket and be charged once a week. Now they're sucked into the Motorola time vortex and invited to step back into 1992, the era of the "luggable" phone and daily recharges.
There's already roaming among European nations... so the only Europeans that need Iridium would be the ones that regularily spend a lot of time outside if Europe. And they would have to be happy with a phone that doesn't necessarily work inside buildings. I have a hunch that most business people like to spend a lot of time within buildings. This would leave rich American construction workers who like to travel as the only major market for Iridium.
WSJ had recently a chilling article desribing the Iridium project. According to the paper, all the satellites were already in the orbit and the phones in production when Iridium people started to think about to whom to sell the phone. When you are hawking a phone that weighs four times as much as its land-based competitiors, costs three times as much as a new PC, and has a stand-by time of 10% of Nokia's new models, this sounds incredible. Makes you appreciate the quirky Nokia habit of first identifying your target customers and their needs, then conducting extensive marketing research, *then* starting to engineer their phones. Not ass-backwards.
I don't know what will happen in September, but this has all the ingredients of a classic Motorola blunder. So would it be too mercenary a point of view to regard this whole Asian crisis as an opportunity for Nokia to get rid of its biggest competitor? Nokia can take a 30% hit on its stock price... but I don't think that Motorola can, not anymore. If Mot's latest platinum-coated turkey flops, it will probably force Motorola to sell parts of the company, most likely infrastructure division and/or paging. The demise of Motorola as an integrated handset/network equipment provider will be a major boost to Nokia in the long run.
Asian crisis works for Nokia in other ways, as well... if phone margins come under siege, Nokia will be the last company in the black. Nearly all of its small competitors are already bleeding cash and Mot's margins are nearing zero. Wouldn't a mini-crash in Nokia's stock price be worth the pain if it forced companies like Alcatel, Samsung and Bosch out of GSM phone manufacturing and delivered Motorola a blow that would dismantle it?
I've already decided to buy some more Noka. It's very hard to say when, though. I suppose it depends on whether Asia stabilizes or whether the real splatter is only starting.
Tero
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