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Technology Stocks : Nokia (NOK) -- Ignore unavailable to you. Want to Upgrade?

To: Marc Schiler who wrote (1958)	6/23/1999 12:07:00 PM
From: tero kuittinen	Read Replies (2) \| Respond to of 34857

OK, this is getting out of hand. Stop watching "X-Files" and "Millennium" episodes back-to-back, Marc; the sinister causal link you implied doesn't exist. First of all - "boosterism" is worse than useless description of any internet commentary on companies with 100 billion dollar market caps. Nothing said here is going to move the share price one cent into either direction. Secondly; it isn't dangerous to turn off your mouth when your brain isn't running every once in a while. It would be a good strategy to consider for many SI posters. As far as Airtouch is concerned - are you talking about the 2100 series (which is being phased out) or the 6100 series (which is being shipped to Sprint in USA and Clearnet in Canada)? In the former case, the model range is vanishing for a good reason - it's based on a 1993 platform. The 6100 series is practically sold out in all three digital formats and Airtouch is nowhere near the top of Nokia's priority list of operators - for a good reason. Sprint isn't even promoting 6185 in many areas; it is selling out anyway. Like I said months earlier, I'm not expecting big gains from Nokia before the 3Q and 4Q numbers come out. But the current progress seems OK. They got the dual-mode phone for Sprint out well before competition - they landed the major CDMA contracts in Brazil and USA that the company needed. In a surprise move, the 6185 is the first WAP/internet browser handset to be announced by Sprint. Right now the competition in the high-end CDMA handset market is soft enough for major gains during summer and fall. On the TDMA front, Motorola is still without an AT&T-approved tri-mode model and Ericsson's TDMA phones are still old. No news. Markets are concentrating on Ericsson's European phone launches - I'd argue that their biggest headache is the disastrous US performance. When Nokia gets the 8860 out for AT&T this fall it's the first and only genuine luxury model ever for AT&T - once again, the lack of competition in the high-end sector should be the key here. On GSM front, it also looks like calm before the storm. European market penetration is growing faster than expected. On the other hand Nokia is slashing the prices of the 5110 and 6110 models in anticipation of their sequel launches during 3Q (3210 and 7110, respectively). These trends may cancel each other out to some extent. The gutsy premium product strategy of the second half carries sizable risks, but it's the only way to keep the profit momentum going on and this is the moment to execute it. Nokia's brand recognition in USA just topped 60% and one independent survey placed it ahead of Mercedes-Benz and Sony in brand value survey. Now or never - if the company does not pull off decisively from the pack after much of the competition is still reeling from steep market share losses, it won't be easier to do next year. This is the first time Nokia has cut the product cycle to 14 months in certain product categories and nobody else is there yet - that should help. Major holes in the high-end range of the competing manufacturers' product portfolios mean that this is Nokia's chance to complete the brand's transformation. The 8800 series will introduce the 700$-plus price range into American TDMA and CDMA markets. The 3210 is supposed to be the entry-level model that can command at least 100 dollar price premium over directly competing models. The 7100 series is the first phone that tries to bridge the gap between normal handsets and bulky, expensive internet models - it has the chassis of a regular 150-gram handset, but extras like a double-sized display and a scroll-key. The new 8850 matches Ericsson's massively hyped T-28 feature for feature... and then throws in extra hooks like magnesium-aluminium alloy as a plastic replacement. The whole point of the 1999 strategy is the emphasis on the second half as a major build-up to the Christmas season. The current share price fluctuations are not very relevant, since the company performance pretty much rests on the model introductions yet to take place. What we can already see is the completely opposite strategic direction many major competitors have taken - much of the field is apparently trying to play it safe with their 1999 models. The difference between: "Can we get away with as few novel features as possible?" and "Can we get a price premium from as many novel features as possible?" is the core issue here. Wall Street currently thinks that creeping Compaqization of handset manufacturing is an equal threat to all companies. That's the gross oversimplification that will be re-evaluated next winter. Tero