Still hedged at $20 and $17.5 -- and liking it. Hope you added to your short as you hinted; looks like the right move. This via CBS MArketWatch.
>>Growth fears shake two mobile pillars
Europe's biggest operator and phone maker take hits
By Chris Nuttall, FT Investor
Last Update: 8:58 AM ET April 18, 2002
LONDON (FT Investor) - First Vodafone, now Nokia.
The twin pillars of Europe's mobile strength have been rocked in the past two weeks as analysts and the markets re-evaluated the industry.
After the run on Vodafone's (UK:VOD: news, chart, profile) (VOD: news, chart, profile) shares last week, Nokia's fell more than 10 per cent on Thursday as it revised downwards the growth prospects for mobile phone and network equipment sales.
Nokia (NOK: news, chart, profile) reduced its estimates for global handset sales this year to 400-420m from 420m-440m, in line with bearish analyst estimates. It also reduced its own expected total sales growth to 4 to 9 per cent, down from the 15 per cent predicted in January.
Nomura, which has a "sell" recommendation on Nokia (SE:000053994: news, chart, profile), said the outlook for 2002 had been the only factor supporting the current share price.
'Massively overpriced'
"Now that the company has downgraded the outlook for the short term, there is no escape from the fact that the stock is massively overpriced," said Richard Windsor, communications equipment analyst, in a note.
"Outlook for 2003 and beyond is going to continue to suffer from the gremlins of no applications to stimulate an upgrade and the threat of Microsoft," he continued.
"We are reviewing our numbers, but they will only go in one direction - DOWN like the share price."
The fundamental concerns are about growth in the industry as some markets reach saturation point, compelling applications to support sales of fast-data phones are slow to materialise and debt-burdened operators continue to rein back spending on network infrastructure.
Reflecting this, Vodafone was characterised by analysts last week as a low-growth utility. See Telecom Daily
"The main topic in the market is whether there is growth in this industry or not," said Inge Heydorn, ABN Amro analyst.
Nokia, of course, thinks there is. Jorma Ollila, chief executive, told a conference call that 2002 would be a year of transition for the industry.
"The service paradigm is not there yet, technology does not bring anything unless there are really unique services," he said.
"These will be happening this year with multimedia messaging [MMS] and more attractive phones."
He added that operators were changing their risk-averse mindset and coming out with the new services. Nokia itself had tested MMS phones on 90 customers and seen them send 7,000 MMS messages over four days.
Global weakness
But some analysts feel Nokia may have peaked on its margins and its market share for handsets, which was still 37 per cent in the first quarter for a market that shrank, with Nokia sales down 7 per cent on the previous year.
Nokia reported weakness around the world.
"Different regions have different reasons," said Jason Chapman, Gartner communications equipment analyst.
"Latin America had great potential but the market has faced economic challenges, China has slowed down equipment investment and has seen slowing subscriber numbers, and we have high penetration already in Western Europe."
Nokia Networks' unexpectedly sharp fall of 29 per cent in Q1 sales does not bode well for Ericsson's (ERICY: news, chart, profile) results on Monday, with the Swedish firm's exposure to infrastructure amounting to 75 per cent of revenues compared to Nokia's 21 per cent.
Ericsson (SE:000010865: news, chart, profile) shares were down 6 per cent on Thursday and Alcatel's (FR:013000: news, chart, profile) (ALA: news, chart, profile), which depends more on the fixed line market, had fallen 3 per cent.
Vodafone led a rally of mobile operators earlier this week, but the shares were down 3 per cent on Thursday, as was mmO2 (UK:OOM: news, chart, profile).
Nokia's numbers were expected to round off a comeback week for the mobile sector on the back of encouraging numbers from Motorola (MOT: news, chart, profile), Texas Instruments (TXN: news, chart, profile) and Sprint (PCS: news, chart, profile). See story
Now they may mark the start of a renewed downward trend. Relief to the gloom is unlikely to come from either results from Ericsson and Alcatel, or Vodafone's key performance indicators next week.<<
Cheers, Tuck |
