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

To: slacker711 who wrote (12458)	6/12/2001 9:45:40 AM
From: Wyätt Gwyön	Respond to of 34857

I wonder where the weakness is focused. Is it just Europe....or did the US/China contribute? In Fred Hickey's latest letter, he says demand in Europe has been hit badly as carriers have cut back on subsidies due to their financial difficulties.

To: slacker711 who wrote (12458)	6/14/2001 1:39:48 PM
From: Eric L	Read Replies (1) \| Respond to of 34857

Slacker, re: Malcolm Spicer on Nokia A few million handsets here, and a few million there, pretty soon you're talking about a serious drop from the number of wireless phones sold around the world last year. << ....the only missing piece (the second quarter) must have dropped off a cliff. I wonder where the weakness is focused. Is it just Europe....or did the US/China contribute? >> I can't help but think that if Nokia had been successful in increasing their CDMA handset market share in the Americas, they would be in a (at least slightly) less precarious position for Q2 numbers. The "misinterpretation of specification" issue really clobbered their objective of accomplishing this, and this quote reminded me of it. >> Nokia Lowers Guidance, Analysts Keep The Faith Malcolm Spicer June 14, 2001 Wireless Today Nokia's [NOK] lowering of its earnings guidance for the second quarter isn't enough to worry equity analysts, but there could be cause for concern if the developments Nokia is depending on for a stronger second half don't occur. "Lowering their total market size doesn't really surprise me that much," Matt Finick, an analyst covering wireless equipment manufacturers for investment bank Thomas Weisel Partners, told Wireless Today. "We've heard so many other companies saying that." However, the upswing that Finland-based Nokia predicts for the second half of the year depends greatly on wireless carriers launching 2.5G services on general packet radio service networks and on Nokia providing GPRS handsets. Depending on service providers to deploy GPRS adds greater risk to Nokia's second-half expectations, Finick said. "There's a lot that's out of Nokia's hands," he said. And what's under Nokia's control doesn't look strong, according to telecom equipment market analysts with investment bank Bear Stearns. "Nokia does not have a working GPRS handset on the market or even being tested with carriers," reported Bear Stearns analysts. "We caution that consumer products, like handsets, have short replacement cycles and although Nokia has executed very well in the past, a serious misstep in this 2.5G cycle could cost the company dearly." Nokia on Tuesday lowered its estimates for year-on-year sales growth for the second quarter 2001 to below 10 percent from its previous estimate of 20 percent. The company estimated its earnings per share level for the second quarter (April-June) to be 13 cents to 15 cents (.15 euros to .17 euros), down from its earlier estimate of 17 cents (.20 euros). In the second quarter last year, Nokia's diluted per share earnings were 18 cents (.21 euros). "We believe that this slowdown is a result of a general market deterioration driven by economic uncertainty, the ongoing technology transition and less aggressive marketing by the operators," said Nokia Chairman and CEO Jorma Ollila. Finick said lower operating margins on handset and infrastructure sales prompted Nokia to lower its per-share earnings estimate. Wireless carriers cutting subsidies for retail prices, as well as a drop in the number of wireless users replacing phones, are lowering margins on handset sales. Telco capital spending cuts are affecting infrastructure sales margins. However, Thomas Weisel analysts maintain a "buy" rating for Nokia shares. The slump in the telco sector this year doesn't overshadow the fact that wireless penetration is only 15 percent worldwide, leaving much of the world - led by Asian markets - for wireless carriers and technology vendors to reach. "You've got a lot of regions in the world where wireless penetration is just ramping," Finick said. "Long-term, it's still a great opportunity. If you want to have a stock in the wireless sector, Nokia is the one to have." In the short term, though, the worldwide market is down, he added. "Asia continues to be a region with strong growth, but is not offsetting a little more of a downturn in the United States and Europe," Bear Stearns reported a similar, if more pessimistic, view. Analysts maintained an "attractive" rating for Nokia shares, saying that the company's immediate problem is sales figures. "We believe that margin-risk may still be inherent going forward," Bear Stearns analysts said. "Although we continue to believe in the long-term story, Nokia shares still appear somewhat expensive." The Bottom Line To paraphrase a former U.S. senator, the late Everett Dirksen: A few million handsets here, and a few million there, pretty soon you're talking about a serious drop from the number of wireless phones sold around the world last year. Nokia and other major handset manufacturers entered this year predicting that 550 million handsets would be sold by all competitors in the market, up from 405 million last year. They backed off that figure during the first quarter and estimated 520 million phone would be sold. Nokia on Tuesday eased up on the gas pedal a little more, saying this year will show "only very modest growth" in handset sales. << - Eric -