Tero Kuittinen chatted on RealMoney.com Monday, Jan. 29 at 5 p.m. EST.
TSC-RealMoneyLaura: Thanks for joining us this afternoon. Today we're talking with Tero Kuittinen about Nokia's (NOK:NYSE ADR - news - boards) earnings.
firefire-guest: Is Nokia catching up to Ericsson (ERICY:Nasdaq ADR - news - boards) on the infrastructure side of the business?
RM_Tero: No, it's not, but it's taking market share from Motorola (MOT:NYSE - news - boards) and Lucent (LU:NYSE - news - boards).
firefire-guest: NOK is often compared to Dell (DELL:Nasdaq - news - boards) in its glory days. Is that metaphor accurate today and looking forward? Or is there a better one?
RM_Tero: I don't like the Dell comparison because it ignores Nokia's infrastructure division. Nokia is now the only mobile telecom company with both healthy handset and healthy network unit.
aysf-guest: How much do you think Nokia depends on GPRS (general packet radio service) to make its earnings and revenues numbers in 2001? What if GPRS slips out to 2002? Is Nokia in big trouble?
RM_Tero: There will be no meaningful GPRS revenues in the first half. The company made this clear last summer. I think regular replacement market will be enough for the first three quarters, but GPRS has to start making impact in the Christmas quarter.
steven15-guest: Will the GPRS phones be safer (i.e. give off less radiation) than the current phone do because they use packet-switching?
RM_Tero: The more people use mobile data features, the safer the phones are. Because you are not cramming the phone into your ear when you are reading and typing.
duhle-guest: Last week NOK received a rare "sell" recommendation by a major brokerage house, arguing that cell phones had become commodities. What's your take on this?
RM_Tero: This major brokerage has made this call for several consecutive years. I am sure they will get it right sooner or later. I doubt it is going to happen this winter.
Jeff: What's your take on AT&T's wireless standard?
RM_Tero: They left the switch to GSM (global system for mobile communications) too late. They will have a hard time executing the new network build-up. And keeping customers happy at the same time.
aysf-guest: How do you reconcile both Nokia's and Ericsson's claims of GPRS infrastructure leadership?
RM_Tero: I don't. I think Ericsson is less than straightforward.
firefire-guest: Tero, is this half-hearted move by ERICY a positive, and even a bigger positive for NOK?
RM_Tero: It's a positive as long as Ericsson keeps it's design team intact. Nokia should maintain its momentum.
firefire-guest: Tero, do expectations have to be guided down, and big time in the industry, or is Nokia walking away with it to the detriment of everyone else?
RM_Tero: I'm not confident with $550 million for this year, but I think $530 to $540 is likely. Now, it's all up to ASP (average sales price).
firefire-guest: Is there a wireless software infrastructure company out there that one has to buy at this point if you investment in the wireless segment?
RM_Tero: I'm afraid it's too early to call that. Either Psion or Palm (PALM:Nasdaq - news - boards) will probably have a bright future.
firefire-guest: Superconductors in base stations and on towers represent an investing opportunity?
RM_Tero: I agree. Taking some sort of position in this market is probably a good idea.
jfrields-guest: What's next for Ericy?
RM_Tero: The outsourcing position makes it easier to get rid of the consumer unit. Ericsson's Bluetooth expertise may mean there will be a buyer. 60% network order growth shows that Ericsson keeps outpacing Motorola, Lucent, Siemens (SMAWY:OTC BB ADR - news - boards) and Alcatel (ALCJF:OTC BB - news - boards).
Mike: Can you give us more info on those new Wireless IPOs to come out this year?
RM_Tero: There are too many of them. I don't think buying Orange or DT (DT:NYSE ADR - news - boards) mobile spinoffs immediately is a good idea. I would wait for a dip.
rwgood-guest618: Seems like Cingular Wireless is spending a lot of money, i.e., SuperBowl ads, any thoughts?
RM_Tero: The ads were horrible. Most consumers don't know what Cingular is. Sprint's (PCS:NYSE - news - boards) focus on pricing is a much shrewder move.
marleydog-guest: Tero, great stuff on RealMoney. Do you like Openwave (OPWV:Nasdaq - news - boards) as a core long-term holding? Thanks.
RM_Tero: Yes, I do. The browser wars make it ugly. But it's the m-commerce part of the company that makes it compelling. It's the browser wars [that] may get ugly.
marleydog-guest: Do you think NOK and Qualcomm (QCOM:Nasdaq - news - boards) will collaborate with W-CDMA (wideband code division multiple access) licensing in the near future? Do you like QCOM as a long-term holding?
RM_Tero: I liked QCOM as a stock when it dipped to 70. I think in this market you [do] better on dips. And, I'm sure Nokia and QCOM will find agreement by the end of this year. I think in this market you better buy on dips.
ChitterChatter: What's your take on Vodafone (VOD:NYSE ADR - news - boards) in the European market -- what with the Euro appearing to make a comeback?
RM_Tero: Vodafone is doing great in Europe. But Verizon (VZ:NYSE - news - boards) may be a millstone. I'm sure it will hit parity this year. The euro will hit parity this year.
lesroza-guest: Which of NOK U.S. suppliers has the best momentum other than TXN?
RM_Tero: It looks like Nokia is increasingly moving toward Asian suppliers. And I think TXN is the only U.S. supplier that is not threatened by Asian competition.
aysf-guest: Why do you think NOK has not licensed CDMA 3G from QCOM? I guess it's poker? But what is the advantage to waiting?
RM_Tero: CEO of Nokia has said that the company does not need additional licenses. It's hard to get the company to elaborate on this. The CEO of Nokia has said that the company does not need additional licenses.
brynk-guest: Any expectation on Nokia's earnings report?
RM_Tero: It's 24 cents, 22% phone margins, 35% network growth. These are the expectations.
aysf-guest: It looks like from Nokia's chart in their capital markets day presentation that their brand acceptance (or was it market share?) in China hasn't improved Q/Q in 2000, as compared to results in other countries. Should NOK longs be concerned about this performance in such an important market?
RM_Tero: Yes, China is a very difficult market, and Motorola has been able to maintain a strong brand there. Asian consumers have been a bigger challenge for Nokia than consumers in Europe, North America and Latin America.
marleydog-guest: You still like Psion even after the deal with Motorola fell apart today? You still like Psion even after the deal with Motorola fell apart today?
RM_Tero: The momentum behind Epoc is considerable. It has received the Asian support it needs. And more importantly, content and application creators. They are showing a lot more enthusiasm than toward any Windows derivative.
burich2262-guest31: How does PCS and Nextel (NXTL:Nasdaq - news - boards) look going forward?
RM_Tero: I have no idea where Nextel is going. The company has not presented a mobile data upgrade model. Their strength has been professional and business users. And this segment of the market keeps shrinking. Sprint has finally started addressing known professional subscribers with their mobile data initiative. Sprint has finally started addressing nonprofessional subscribers with their mobile data initiative. This is a lot better approach than their business emphasis of the last year was.
theidea-guest: You're earnings estimate of 24 cents seems high, did you mean 0.24 euros?
RM_Tero: No, I don't. I think Nokia is expected to beat the street consensus. It's the guidance people worry about.
leonidov-guest: Do you think Research in Motion's (RIMM:Nasdaq - news - boards) and pager-based tech will be superseded, like 8 tracks and Beta by more advanced phone-based tech?
RM_Tero: You bet! RIMM's decision to launch in Europe is mystifying. In both Europe and Asia, demand for paging products is stalling. It looks like North American wireless market is rapidly diverging from the trends in Europe and Asia.
PeoplePleaser: What are some companies that aid in telecom but aren't a part of the telecom sector?
RM_Tero: It would be that RF Micro Devices (RFMD:Nasdaq - news - boards), and Infineon (IFX:NYSE - news - boards) and similar semiconductor companies are not, strictly speaking, telecom firms, but will mirror the sector.
duhle-guest: Do you think that these debt-laden European telcos like DT will go down again as soon as these wireless IPOs have taken place? They still seem to be overvalued, margins are still coming down. Any thoughts?
RM_Tero: My big worry here is that we won't get a clear idea of what impact mobile commerce will have on operator revenue growth. Until 2002 or 2003. Does Wall Street have the patience to wait until then without freaking out periodically?
blgg-guest: Evening Tero, Parthus chief executive Brian Long recently stated that target [for] the date for commercial quantities of GPRS handsets "may have to be put back until the end of 2002". How do you view the impact of this possibility on NOK's prospects going forward? When will GSM vendors finally come to grips with apparently serious problems with GPRS handsets?
RM_Tero: Parthus has its own car in a ditch, as we say in Finland. Parthus has it's own "cow in a ditch," as we say in Finland. As a Bluetooth company, they would love GPRS to miss all kinds of deadlines. I think there is room for both Bluetooth and GPRS. So I sort of wish these two camps would stop backstabbing each other.
liveoak-guest: Any thoughts on whether Sonera (SNRA:Nasdaq - news - boards) breaks out of its trading range here?
RM_Tero: It probably needs more concrete evidence of an impending takeover to manage that. I'm afraid the company is going to need that.
aysf-guest: Has NOK fixed the two-way SMS for Verizon? Do you think NOK can recover from this initial stumbled with a renewed customer?
RM_Tero: Looking at Verizon's subscriber growth I would have to say they need all the brand strength they can muster. I think they will have another shot at Nokia.
jgiven-guest: Does 724 solutions SVNX look like a winner long term? It seems to have strong partners lined up.
RM_Tero: For a North American company, it has received remarkable support in Europe. I like mobile software companies that can gain major partners on both sides of the pond. Too many of these companies are entirely dependent on either Europe or North America.
TallPaul: Who is less hurt if GPRS delays 3G rollout?
RM_Tero: Nokia and Ericsson have their future revenue partially dependent on how fast GPRS subscriber base increases. They aren't making much money from GPRS until the subscriber base grows meaningfully. On the other hand, Lucent and Motorola have only a handful of commercial GPRS deals. They might like to see 3G implemented as early as possible, so that Ericsson would run into capacity constraints.
jeffd29-guest: Tero, What's your outlook for RF Micro Devices?
RM_Tero: Apparently Nokia has switched some of its business to an Asian rival. It's hard for me to tell what the long-term impact is. This is not necessarily alarming, because Nokia always starts splitting its orders when it grows too dependent on a single subcontractor.
burrito: Can AT&T Wireless (ATW:NYSE - news - boards) carry the burden of AT&T's (T:NYSE - news - boards) woes?
RM_Tero: That's a whole lot of burden! I don't think AT&T has as much consumer goodwill as it did a couple of years ago.
TSC-RealMoneyLaura: Thanks for joining us this afternoon. Tero, any final thoughts?
RM_Tero: Thanks a bunch for showing up. My big nightmare is that I start a chat, and nobody is there!
thestreet.com
I hadn't heard of NOK moving out from RFMD to an Asian supplier.
Jack |
