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

To: elmatador who wrote (16687)	11/20/2001 3:05:16 PM
From: Ruffian	Read Replies (2) \| Respond to of 34857

Cell phone executives see slow recovery By Lucas van Grinsven and Sabine Bub Reuters (11/19/01, 01:44:45 PM EST) LONDON/MUNICH -- Cellphone executives say the global industry found its low in the third quarter and is now starting to recover, but many add that a recovery will be slow in coming and the recent stock rally will prove premature. Nokia Chief Executive Jorma Ollila became on Monday the latest in a string of executives to predict a revival in the mobile market, but told journalists it would not be ''necessarily a sharp one.'' Earlier, German chip maker Infineon said demand for cellphone chips is picking up, while its parent company Siemens said last week it saw a positive development at the handset division. Meanwhile, Flextronics, which assembles phones, said demand for handsets was improving. ``From different corners of the world, positive cellphone reports are emerging,'' said Merck-Finck analyst Theo Kitz. Meanwhile, shares in the cellphone industry have already run ahead of the recovery. Finland's Nokia and Sweden's Ericsson have almost doubled from their lows two months ago. Many say that the rally, which is also apparent in other tech sectors, has come too soon. Share prices are still far from their record levels last year, but profits also are well below last year's levels. It means that share prices measured in relation to per-share earnings look stretched, once again. ``We're worried that we're entering a mini-bubble,'' said Merrill Lynch technology strategist Steven Milunovich. Any justification for these lofty valuations can come only from the return of hyper-growth, but market forecasters for the cellphone industry do not see a return of the runaway growth of previous years when annual sales rose 50 percent or more. What's more, prospects for growth look distant, with telecoms operators currently cutting budgets by some 10 percent next year. Torbjorn Nilsson, Ericsson head of strategy and markets, told journalists on Monday he could not yet see any optimism returning to telecoms operators. Growth in recent years was driven by heavy subsidies from operators, which were eager to sign up customers. They were expanding in affluent markets that started off with few cellphone users. That situation has changed dramatically. Subsidies have been cut back because debt-burdened operators are now focusing on profits. Markets have become saturated, making it difficult to sell new phones to customers who scrutinise household bills at a time of economic uncertainty. In addition, new attractive services such as video email, which could boost demand for more advanced phones, are not yet on the market. The few new cellphone gadgets that will be on offer this winter, such as color screens and always-on Internet connections, will not be enough to thrill the mass market, said Gartner analyst Ben Wood. ``We've seen some reality coming to the market in the past year. I think we will eventually go back to a more normal growth curve of some 10-15 percent,'' he said. For real indications about potential growth, some analysts turn to orders of components such as crystal elements, which are needed in every single display for handsets. The number of these orders fell more steeply year-on-year in October than in August and September, when the Christmas production ramp-up started. That can mean only one thing, said ING Barings analyst Hendrik Zonnenberg. ``End demand is not there, and that's not good for fourth-quarter growth. We're still bumping along the bottom. The upside potential looks very limited.'' A new range of products, which Nokia unveiled in Barcelona earlier on Monday, will not be shipped in time for Christmas. Nokia shares were punished for its missing the key holiday season. The shares fell 2 percent in a flat technology market. Earlier on Monday Gartner said sales of handsets to consumers accelerated their decline in the third quarter, off 10 percent compared with the year-ago period. If the Christmas period does not bring the usual jump in sales, shipments are likely to drop below 400 million units for 2001, Gartner said. That is 10 percent below last year and the first drop in the industry's short history.

To: elmatador who wrote (16687)	11/20/2001 4:39:40 PM
From: Eric L	Read Replies (1) \| Respond to of 34857

elmatador, << ERICY has a chance to turn the tables against NOK as MMS picks up. There lies the window of opportunity to ERICY and the risk to NOK. >> I would be interested in having you expand on this, if you would. I'm not exactly sure I understand where Ericsson's or Sony Ericsson's potential "window of opportunity" lies in this particular aspect of 2.5G/3G networks, servers, or terminals, as opposed to some areas. BTW: I have some reservations about how the cultures of Sony and Ericsson will interact, but I am pretty impressed with the Sony Ericsson GPRS product line that is on retailers shelves right now. I don't think anyone has anything comporable across the range. The downside is that the carriers appear not quite ready (perhaps sensibly so) to push GPRS quite yet. Thanks for the Lehman Brothers clips, and the FT link. Some other clips from Chris Nuttall's article "Pick Up Phones When Networks Down" that are interestiong are these: Handsets only bright spots for manufacturers ... Operators may be still giving them away, but the only telecom equipment that seems to be worth anything to manufacturers and analysts at present is mobile phones ... Nokia generates 90 percent of its operating profit from handsets and is Goldman Sachs' favourite pick in the sector. ... handsets were the one market in 2002 where there was some real visibility, it said, and even potential upside. ... ABN Amro, which also has Nokia as its key pick, believes it will enjoy a significant improvement in market share for handsets in Q4, to more than 34 percent from 32.8 percent in Q3. FT even threw one in for the "Qualcomm Headbangers" (respectfully referred to as Quidiots here): Qualcomm is its [ABN Amro's] top global pick based on a worldwide handset recovery and nominal hardware exposure. That is a nice positive outlook on handsets and a pretty sensible rationale for valuing Qualcomm, IMO. On the other hand the "Qualcomm Headbangers" won't like Lehman Brothers (presumably Tim Luke) saying positive things about ... ... Nokia's focus on GSM/UMTS, an addressable market set to grow from 62 percent to 80 percent in the next 5 years or so. Overall market growth will be slower. Meantime, I thought that Vodafone's plans to up Cap Ex next year was a very positive sign. Perhaps a few others will follow and lift the infra pall, and you'll be in GREAT spirits. Best, - Eric -