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

To: yzfool who wrote (3465)	2/1/2000 2:50:00 AM
From: Lazlo Pierce	Read Replies (3) \| Respond to of 34857

From thestreet.com... Expect Strong Numbers From Nokia, but Don't Expect Stock to Rally By Scott Moritz Staff Reporter 2/1/00 12:05 AM ET Expect Nokia (NOK:NYSE ADR - news) to report strong fourth-quarter numbers Tuesday morning. But don't expect its stock to rally. Wall Street, whose cooling ardor for the wireless sector was evident in the Qualcomm (QCOM:Nasdaq - news) selloff last week, wants to see Nokia post solid numbers and address its wireless-phone Achilles' heel -- its lagging sales in the CDMA wireless standard. Investors will also be watching for data on market share and margins, as well as indications that an industrywide component shortage won't drag down revenue growth. But if history is any guide, Nokia shares are likely to take a beating Tuesday no matter whether the company buries the 67 cent-a-share First Call/Thomson Financial earnings estimate. Nokia reported positive earnings surprises in each of the past four quarters, but investors nonetheless punished the stock immediately following three of those reports. The stock's recent run-up is partly to blame, analysts say. Great Expectations Nokia shares rose more than 200% last year as the fashionable Finnish phone fabricator continued to boost earnings by outselling its closest rivals Motorola (MOT:NYSE - news) and Ericsson (ERICY:Nasdaq ADR - news). The stock jumped 2% Monday to close at 184, just off its 52-week high of 196. Why? Execution: Preliminary estimates by research firm Dataquest put Nokia's 1999 worldwide handset market share at 27%, a 4-point increase over last year and 10 points more than Motorola. "This is a market that is expecting a lot out of everyone," says Deutsche Banc Alex. Brown analyst Brian Modoff, who has a buy on Nokia. "This stock had a huge run last year, and so it is logical that people would be looking for reasons to take profit." (Deutsche Banc Alex. Brown has no banking ties to Nokia.) That's been the pattern anyway. Last year, Nokia beat December-quarter estimates by 7 cents, but the stock fell 8.5% in the two days following. This year, analysts said they weren't aware of an informal Nokia "whisper" number, but it appears that a surprise of more than a few cents may be necessary to placate impatient investors. Don't expect a repeat of last week's Qualcomm rout if Nokia fails to trounce the consensus estimates, but "there is a similar pressure to perform and they are going to have to be over by more than a penny," says an analyst who asked not to be identified. Soft Spot While Nokia dominates two of the three digital wireless technologies, it continues to be weak in CDMA, the fastest-growing technology in the U.S. For example, Nokia has been unable to successfully deliver CDMA Web phones to Sprint PCS (PCS:NYSE - news), which is the fastest-growing wireless service provider in the nation. The impact of Nokia's CDMA deficiency hasn't yet hurt revenue, but Motorola and Samsung, among others, stand to gain market share as they bring new CDMA models to stores this year. CDMA weakness "is an issue Nokia has to resolve, but in terms of volume to its business, it doesn't mean a lot to the bottom line at this point," says Modoff. "Their strength in other areas can offset CDMA." But with Wall Street taking a harder look at tech these days, distant problems can show up as an immediate shock to stock prices.