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

To: Eric L who wrote (975)	7/24/2001 6:51:32 PM
From: A.L. Reagan	Read Replies (2) \| Respond to of 9255

Eric, great, meaty post. Thanks. But I do have a question: If you take 190 million handsets sold this year, and realize that 121 million have gone to new subs and add the year starting excess inventory of 30 million in you have 30 million plus 69 million = 99 million replacements = 52% of sales, not so far off year beginning estimates of handset sales being 50% of total units sold this year. Struggling a bit with the assumption that all of the "excess inventory" consumption must be, by default, replacement or subscriber churn sales. I was comparing vendor sales forecasts with EMC's net subscriber adds. I believe the assumption is correct only to the extent of "excess inventory" that is in distribution channels. Excess inventory still on the vendors' books isn't in anybody's sales numbers. So if NOK, or MOT, or EMC, or whoever, uses a figure of say 405 million handset sales for 2001 at the vendor level, that includes whatever was in beginning inventory. My assumption is that at 1/1/01 inventories in handset channels weren't particularly large, but there was a huge pile-up of FG and WIP at vendors, that has now become part of the 2001 sales figures, and when ultimately disposed would be proportionately distributed between new adds and replacement/churn sales, assuming a relatively constant level of inventory in the channel. You did specifically cite 30 million excess in channels @ 1/1/01, maybe I was asleep at the switch, don't recall any such numbers. I know MOT had huge numbers, a bunch at contract manufacturers, where was all the channel stuffing? In addition to all the other caveats on looking at these macro subscriber and handset forecasts, you did a service by indicating that investors do need to make sure apples and apples are being compared, in terms of whether statistics are viewed at the vendor or carrier level. I think we can agree that replacement sales this year have been crappy. While we all knew going into 2001 that there was going to be a product transition air gap, it looks to me like the rate of conversion from analog to digital has slowed from what we'd seen in the past. (Must be getting down to the hard-core user base.) W/r/t CDMA sales, if Dr. IMJ's 80MM forecast comes to pass, and your 450MM forecast happens, that's 17.8% of the worldwide market, quite a jump from 2000, and I think that's only possible if Unicom orders "millions and millions" of CDMA phones in 4Q. There has to be pent up demand out there. God send mobiles! (Would like to see the NOK 8310, and others, appear on a carrier website sometime soon.) The cellphone junkie sites have the NOK GPRS phones featured, and reviewed, couldn't find nary a "coming soon" mention on any Vodafone, Orange, etc. site. ------------------------------------ re: Ed Snyder. My experience is that he gets it wrong as often as he gets it right, but a wise investor ignores the data points at his own peril. ------------------------------------ OT note to mightylakers: the E.J. of hoops to whom you refer was a freshman my last year of grad school at Michigan State. He grew up in Lansing, and was a high school terror throughout my tenure at MSU. I will never forget Magic and Greg Kelser in 1979 winning it all. Michigan's greatest gift to LaLa land.