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

To: Ramsey Su who wrote (21417)	7/24/2002 10:44:10 AM
From: carranza2	Read Replies (1) \| Respond to of 34857

How these telecom giants can go down the same path, one after another, could be a good project for business school to digest. The path was one lined with primroses planted by Nokia and others; it was fertilized with extravagant propaganda initiated at the height of the telecom bubble by the same culprits. Why? Groupthink and entrenched interests are powerful things. No one wanted to hand over the keys to the telecom world to an American co. Plus, a lot more money to be made by not using technologically-superior QCDMA. Having lived through it, I thought you already knew the hows and whys. vbg The interesting question, though an academic one, is whether the GSMers would do things differently in the light of experience. Probably not--still a lot of GSM phones to be sold and a whole lot of money still to be made selling network infra for EDGE, GPRS, and UMTS. The sad fact is that the QCDMA transition to 3G doesn't make the kinds of profits for the infra and handset suppliers than its alternative. Follow the money, the reasons become obvious. The really interesting question to me is why the carriers allowed this state of affairs to go forward. They presumably were as well informed as the denizens of the Q Moderated Board.

To: Ramsey Su who wrote (21417)	7/24/2002 11:19:48 AM
From: Eric L	Read Replies (1) \| Respond to of 34857

Ramsey, re: 3GSM "Commercial" v. "Pre-Commercial" 2002 Launch << While I have no doubt that Nokia will deliver "something" for the grand September promise, the likelihood of any commercial value from 3G products is nil in the immediate future. >> I'll respond to your other questions and add my own comments to the above sometime within the next 24 hours but in the interim I thought you might find this article by Ray Le Maistre interesting: >> Finns Head For Limp Launch Ray Le Maistre European Editor Unstrung 07.22.02 The interpretation of "commercial launch" will be stretched to its limits in Finland this September. Homegrown mobile talents Sonera Corp. (Nasdaq: SNRA) and Nokia Corp. (NYSE: NOK) are sticking to their timetable for a joint 3G jamboree, despite indications that the occasion will be little more than a photo op. The two Finnish companies decided earlier this year to combine their respective launches – Nokia's 3G handsets and Sonera's commercial UMTS services – on September 26. But Europe's mobile operators are still in the thick of handset interoperability testing, and Nokia is now looking at 2003 for volume 3G handset shipments. "I doubt you will be able to buy any handsets or 3G services in the shops on September 26," Bengt Nordström, president of Swedish consultancy Northstream, tells Unstrung. The launch "will have some window dressing, and there will be some value for both Nokia and Sonera in this. But the real issue is: when will there be a proper commercial launch? For that you need phones in the shops, services and roaming. That will not be until 2003 or 2004," says Nordström. He adds that Northstream has been testing NTT DoCoMo's 3G FOMA service at its office in Japan, and although "the data throughput is very impressive, there are some serious challenges, such as battery life, which is very short. As a result, customers are choosing 2.5G services. The question that needs to be asked [about upcoming 3G launches in Europe] is whether there will be anything for the customer that is more interesting than [the services and handsets available] with 2.5G? Just because 3G exists doesn't mean it will impress [mobile customers]," states Nordström. The Finnish companies, meanwhile, are keeping their plans to themselves. "September 26 is still the date of the launch, but there are no further details," says a Sonera spokeswoman. And they mean no details: "I don't know if we have any estimations [about the number of handsets that will be available]," she says, adding that the services to be launched and the location(s) for service are not known. Can the staff at Nokia enlighten us? Of course not. "That is the date of the Nokia 3G handset launch. The idea is for Nokia and Sonera to showcase what 3G has to offer," says Pekka Isosomppi at Nokia's mobile phones division. He confirms there are no other details and says a venue cannot be revealed, as the companies "have not yet sent out their invitations." We look forward to receiving ours. What about the 3G handsets? Will they be available in large volumes? "Bear in mind that one bird does not make a summer," replies Isosomppi poetically. "It depends on the plan of the operator and the other manufacturers involved." Right. It seems, then, that the upcoming lack of 3G handsets in any significant volume will be due to the unreadiness of the market, rather than Nokia's inability to deliver. The company already said so in last week's financial results release: "Depending on operator schedules in WCDMA networks, we expect the 3G business system to be mature enough for commercial handset shipments by early 2003." Isosomppi bangs this point home: "2003 will be the year for 3G services and for networks to open [Ed: Don't forget about Sonera, Pekka!]. I think MMS will proliferate in 2002 and this will pave the way for 3G to be more meaningful." Nokia is looking to add revenues from MMS-enabled phones, which are available in the shops, in the second half of this year. Can we expect Nokia to be delivering any number – even a very low number – of 3G phones to any other operators before 2003 comes banging at our doors? "There are no public announcements, but it is fair to say that will be the case," is as close as Isosomppi would come to saying "Yes." - Eric -

To: Ramsey Su who wrote (21417)	7/25/2002 11:03:40 AM
From: Eric L	Respond to of 34857

Ramsey, << The tough questions going forward ... are there performance guarantees involved? [infra financing] >> I have to assume there are, at least in some cases, and they vary by customer. Part of the reason for my slow response here is that I was looking for a CC (didn't find it but I still might) where I thought that Olli-Pekka Kallasvuo (CFO) addressed this. My foggy recall was that he stated that their was some portion of the financing that could not be placed with commercial financial institutions (at least initially) because of some performance guarantees, but as I say, my recall on this is a bit foggy. << how much of Nokia's projected revenue growth rates is dependent upon these vendor financed orders, plus the handsets? >> I think that the answer to that depends on whether or not you mean long-term or short term and failure or success in terms of the customer relationships that develop as inevitable obstacles are hurdled as 3GSM technology evolves from very immature to mature. The addressable market for 3GSM infra particularly in the years 2004 to 2008 is huge and Nokia plans to take a good chunk of that business. Depending on who you listen to, 3GSM infra represents 65% to 85% of an addressable market that should exceed $100 billion per year. A realistic Nokia share of that is > $20 billion per annum. Infra is lumpy. It is a great business when vendors are pumping iron and it sucks when they are not. Nokia has less than <$4 billion strategically committed to financing in the early stages of 3GSM implementation, and in my estimation that is chump change related to the potential payoff in future revenue growth from infra particularly if you factor in any contractual handset tie in, or even factor in the advantage of being a turnkey supplier of handsets as well as infra. The same amount is NOT chump change for players that do not have the balance sheet, commitment to R&D, operating margins, cash flow, or debt rating, that Nokia enjoys. Some of these guys are going to be further squeezed by Unicom on upcoming 1xRTT deals, IMO, and in ROW this places Nokia in pretty good shape if another major and strategically important deal or two turns on financing. << under what conditions would repayment start on these financing? >> I assume on technology acceptance which will occur over the next 12 months, starting this quarter. I seriously doubt that there will be major deferment of payment. << While I have no doubt that Nokia will deliver "something" for the grand September promise, the likelihood of any commercial value from 3G products is nil in the immediate future. >> They will deliver "something" even if "pre-commercial" which is what BAM's 96 "commercial" IS-95 launch in Trenton with the QCP-800 was, and what SKT's IS-95C "commercial" launch was in 2000 with the SK SKY model. If a commercial customer can walk into a shop and buy a dual-mode handset with a paid subscription, then 3GSM is "commercial", and I don't know if NEC, or Motorola, or Sony Ericsson, Nokia are going to have "commercial" dual-mode 3GSM handsets available this year or not. As for "the likelihood of any commercial value from 3G products" you start with infra and whether we are talking EDGE or WCDMA the revenue tap for infra turns on this year. The carriers, other service providers, and developers (outside of Korea and Japan) are going to have to wait for "commercial value". << How these telecom giants can go down the same path, one after another, could be a good project for business school to digest. >> I suspect that many B-schools are already looking at that great American invention - the spectrum auction - already, and also looking at the whole wireless multimedia data technology push without business case development as a general concept. The "project" might look different in 2010. Most certainly the players will be reduced and IMO on the carrier side the carriers with big chunks of spectrum will be the winners and I say that because I believe that wireless multimedia data will successfully adopted on a major scale by then. Meantime, my fingers are crossed for the reception given to this afternoon's earnings. Best, - Eric -

To: Ramsey Su who wrote (21417)	7/31/2002 9:28:46 AM
From: Eric L	Respond to of 34857

re: "a business school case study for the ages" << Could be a good project for business school to digest >> "Maybe this news doesn't mark the end of UMTS as we know it, only the end of insane business plans." >> Hardly the End of 3G Bill Menezes Editor in Chief Wireless Week July 29, 2002 As if a sinking stock market and slow spending by U.S. wireless carriers isn't enough, last week we had the Europeans piling on. Word that Telefonica and Sonera are ditching their plans to create a new 3G network in Germany–through their so-called Group 3G venture–whipped wireless doomsayers into a new frenzy. The ripple effects primarily slammed equipment vendors such as Ericsson and Nortel Networks, which as we all know already are hurting for new business. But maybe this news doesn't mark the end of UMTS as we know it, only the end of insane business plans. For starters, one might look at the Group 3G business plan and ask, "What were they thinking?" Germany's current wireless market is controlled, to the tune of about 80 percent market share, by local incumbent Deutsche Telekom and Vodafone's D2 business. That left four–count 'em, four–other national carriers to fight over the remaining 3G scraps using a still relatively untested technology and carrying the burdens of heavy spectrum license debts. It's not surprising the smallest German 3G licensee, Mobilcom, already had pulled back from its own UMTS deployment plans by the time Sonera and Telefonica saw the light. For the non-dominant players, going after the 3G market in Germany made about as much sense as Canada's Bell Mobility or Telefonos de Mexico coming into the United States, acquiring spectrum licenses and building networks to compete with AT&T Wireless and Verizon Wireless for 3G customers. Or as much sense as Sprint PCS' ill-fated Pegaso investments in Mexico, where Telcel's stranglehold on the market remains as tight as ever. The reasons why venerable operators such as Telefonica and Sonera decided to join the high-risk, high-stakes rush to deploy UMTS outside of their established markets will be a business school case study for the ages. But the fact they've finally owned up to the fact that their business plans for UMTS proved unworkable shows they've learned their lessons–albeit, the hard way. << - Eric -