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

To: sisuman who wrote (4274)	10/18/2006 2:04:11 PM
From: Eric L	Read Replies (3) \| Respond to of 9255

Motorola Opened the Door ... ... and we'll see if Nokia can walk through it. Motorola sales of $10.6B missed estimates by ~$400M (~$300M in handsets, ~$100M in Networks on weak EMEA GSM infrastructure for Moto). Motorola's Q3 Earnings CC presentation Slides are here ... tinyurl.com I'll be doing cartwheels if Nokia cranks 82 million units at 101 € while maintaining margins from Q2 ... but I'm not sure that's in the cards. We'll see tomorrow. TMF Nokia board mainstay RP99 thoughtfully abstracted analysts NOK.1V estimates "based on reporting in Finnish financial newspaper on a poll of 46 analysts" on October 15 in post #32924. I believe that was a poll by Kauppalehti/SME that I've seen referenced but have not seen in its entirety. This Reuters article ... tinyurl.com ... refers to their own poll of 38 analysts. While both polls suggest a handset ASP of 100 € (down sequentially 102 €) which will affect top line and possibly margins, there are some differences. It should be noted that Deutsche Bank analysts has stated they remain concerned that a product gap in the mid range would lead to lower-than-expected average selling prices (ASP). The broker forecast an ASP of 96 € in the quarter, below consensus of 100 euros. Part of Moto's disappointment was ASP related. Analysts anticipated Moto's ASP to drop from $138 to $135/$136. Instead they dropped to $131 and while their unit sales of 53.7 million were close to analysts consensus estimates of 54 million units they were well shy of the whisper estimate of 55+ million. As a consequence Motorola Mobile Device revenue reduced 1.5% from $7.14 Billion in Q2 to $7.034 Billion in Q3 despite the fact that unit sales were up 1.8 million QoQ (+3.5%) from 51.9 million units to 53.7 million units. To Motorola's credit and despite the ASP and revenue drop, Operating Margins for Mobile Devices increased from 11.2% in Q2 to 11.6% (adjusted down from 11.9% because of a TTPcom acquisition related adjustment). Operating Earnings from the division were up sequentially to $819 million (adjusted from $835 million) from $799 in Q2. NOK EPS Kauppalehti/SME says: Nokia''s July-September diluted EPS is seen unchanged year-on-year at 0.22 eur, with the range from a poll of 46 analysts by Kauppalehti/SME pegged at 0.19-0.25 eur. Reuters says ... Excluding one-off items, Nokia's earnings per share are set to jump in the quarter to 0.24 euros from 0.19 euros in the prior-year period. but qualifies it by stating "Its reported net earnings will include a 150 million euro writedown for ending CDMA phone production." Nokia Net Sales Kauppalehti/SME forecasts sales to rise 18% to 9.878 billion euros ($12.36 billion). Reuters says ... Analysts on average also forecast net sales at 9.9 billion euros for the July-September period, an 18 percent advance from the same quarter a year ago. The average selling price (ASP) of a Nokia phone is expected to fall to 100 euros in July-September from 102 euros the prior quarter, due to booming sales in emerging markets, where consumers usually go for cheaper models. Nokia Unit Sales and Share Analysts polled by Reuters expect Nokia to have sold 81.2 million handsets of all models in the third quarter v. 81.8 million estimated in the Kauppalehti/SME poll. Based on results to date I'm anticipating 3rd parties like Strategy Analytics (SA) and IDC to provide preliminary post-earnings sell-in estimates of at least ~146 million units and on that basis Nokia will maintain share (33.3% in Q2 according to SA) if they report 81.8 million units. They'll lose 0.03 percentage points of share if they only report 81.2 million. Last quarter Nokia lowballed global unit sales at 230 million units while Moto saw it at 235 million - in line with SA (235.3m) and IDC (237.8m). On the sell-through side, however, Gartner saw 229.1 million units in Q2 -- close to Nokia's estimate and implying an inventory overhang. I'm anticipating Nokia to have a global view of 240 million in Q3, but I think that will be low for sell-in, perhaps about right for sell through. This quarter Sony Ericsson sees global sales of 245 million units in Q3. Motorola implies 240 million in claiming that they saw a gain of its global market share to 22.4%, which according to them (but not those that track share) "is there 8th consecutive quarter of Q/Q market-share growth!" I'm reasonably confident that when SA and IDC report their preliminary share estimates tomorrow or Friday that those estimates will show that Motorola lost share again, just as they did in Q4 2005, although if Nokia reports less than 81 million units Motorola's sequential share loss will be less than the 0.3 percentage point loss I'm calculating, but best case Moto's share this quarter is flat to slightly down. FWIW: My Q3 2006 Unit Sales and Share WAG I've plugged in the Kauppalehti/SME unit sales estimate of in my abstracted guestimation below. 'Others' is always a wild card. There's no question that BenQ will be down so the question is how much. Same for the other 'Others.' 15 Month Global Shipments and Market Share Estimates° · Global 2006 Sell-In Q3 '05 Q4 '05 2005 Q1 '06 Q2 '06 Q3 '06 CYTD ========== ====== ====== ====== ====== ====== ====== ====== Nokia 66.6m 83.7m 264.9m 75.1m 78.4m 81.8m¹ 235.3m¹ 31.7% 34.1% 32.4% 33.3% 33.3% 33.3%¹ 33.3%¹ ---------- ------- ------ ------ ------ ------ ------ ------ Motorola 38.7m 44.7m 146.0m 46.1m 51.9m 53.7m 151.7m 18.4% 18.2% 17.9% 20.4% 22.1% 21.8% 21.5%³ ---------- ------ ------ ------ ------ ------ ------ ------ Samsung 26.8m 27.2m 102.9m 29.0m 26.3m 30.7m 86.0m 12.8% 11.1% 12.6% 12.8% 11.2% 12.5%³ 12.2%³ ---------- ------ ------ ------ ------ ------ ------ ------ SEricsson 13.8m 16.1m 51.1m 13.3m 15.7m 19.8m 48.8m 6.6% 6.6% 6.3% 5.9% 6.7% 8.0%³ 6.9%³ ---------- ------ ------ ------ ------ ------ ------ ------ LG 15.5m 16.2m 54.9m 15.6m 15.3m 16.5m 47.4m 7.4% 6.6% 6.7% 6.9% 6.5% 6.7%³ 6.7%³ ---------- ------ ------ ------ ------ ------ ------ ------ Others 48.8m 57.6m 197.2m 46.6m 47.7m 43.5m 137.8m 23.2% 23.5% 24.1% 20.6% 20.3% 17.7% 19.5% ========== ====== ====== ====== ====== ====== ------ ------ Total 210.2m 245.5m 817.0m 225.7m 235.3m 246.0m² 707.0m² 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% ========== ====== ====== ====== ====== ====== ====== ------ Growth YoY 25.5% 24.9% 20.1% 29.6% 25.7% 17.0% NA ======================================================================= ° Q3'05 through Q2'06 sales and share are Strategy Analytics estimates ¹ Not yet reported. Average estimate of 46 analysts (per RP99 on TMF) ² My guestimate of Q3 sell-in of 246m units and 'other's sales ³ Preliminary share guestimate based on 246m Q3 sell-in · Sell-in Share Gains and Losses: YOY and QoQ · Global YoY QoQ Sell-In Q3 '05 Q2 '06 Q3 '06 Gain / Loss Gain / Loss ========== ====== ====== ====== ============= ============= Nokia 66.6m 78.4m 81.8m +15.2m +22.8% +3.4m +4.3% 31.7% 33.3% 33.3% +1.6 ppt. Flat ---------- ------- ------ ------ ------------- ------------- Motorola 38.7m 51.9m 53.7m +15.0m +38.8% +1.8m +3.5% 18.4% 22.1% 21.8% +3.4 ppt. -0.3 ppt. ---------- ------ ------ ------ ------------- ------------- Samsung 26.8m 26.3m 30.7m +3.9m +14.5% +4.4m +16.7% 12.8% 11.2% 12.5% -0.3 ppt. +1.3 ppt. ---------- ------ ------ ------ ------------- ------------- SEricsson 13.8m 15.7m 19.8m +6.0m +43.5% +4.1m +26.1% 6.6% 6.7% 8.0% +1.4 ppt. +1.3 ppt. ---------- ------ ------ ------ ------------- ------------- LG 15.5m 15.3m 16.5m +1.0m +6.5% +1.2m +7.8% 7.4% 6.5% 6.7% -0.7 ppt. +0.2 ppt. ---------- ------ ------ ------ ------------- ------------- Others 48.8m 47.7m 43.5m -5.3m -10.9% -4.2m -8.9% 23.2% 20.3% 17.7% -5.5 ppt. -2.6 ppt. ========== ====== ====== ====== ============= ============= Total 210.2m 235.3m 246.0m² +35.8m +17.0% +10.7m +4.5% 100.0% 100.0% 100.0% ========== ====== ====== ====== Growth YoY 25.5% 25.7% 17.0% ======================================================================= · Quarterly Increase/Decrease of Unit Sell-In (Reported and Guesstimated) · Moto 1.8 million unit increase (+3.5% QoQ) Samsung 4.4 million unit increase (+16.7% QoQ) SEricsson 4.1 million unit increase (+16.7% QoQ) LG 1.2 million unit increase (+7.8% QoQ) Nokia 3.4 million unit increase (+4.3% QoQ) (Guesstimate) ========= ========================================== Subtotal 14.9 million unit increase Others -4.2 million unit decrease (Guesstimate) ========= ========================================== Total 10.7 million unit increase (Guesstimate) Q2 235.3 million units (Strategy Analytics) ========================================== Q3 246.0 million units (+4.3% QoQ, +17.0% YoY) (Guesstimate) The usual caveat applies to the abstract above. It is possible that I've made transposition errors, typos, or calculation errors. - Eric -