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

To: Eric L who wrote (4363)	11/7/2006 11:07:37 PM
From: sisuman	Read Replies (2) \| Respond to of 9255

Eric - Some thoughts on where Nokia might be going - at year-end, and for 2007. 1. Analyst consensus guesses for Nokia EPS are $1.24 for '06 and $1.46 for '07. Per Schwab data, typical Nokia 2004/2005 P/E's are: TFQ - 19x min. to 22x max = $23.56 to $27.28 price for year-end '06 (average = $25.42) FFQ - 15x min to 17x max = $21.90 to @24.82 price for year-end '06 Nokia's closing price at the end of December '05 was $18.30, so an end of year '06 price of just $23 would represent 25.7% growth - I'll take that any year! If Nokia makes the $1.46 EPS number in 2007: TFQ - 15x to 17x = $27.74 to $32.12 year-end '07 price (average = $29.93, or growth of 17.7% from '06 price of $25.42) Nokia Positives for 2007: * Per ML - WCDMA growth of 67% YOY, from about 100 million units to 168 million; Nokia holds 46% of that market. * Nokia is rid of CDMA drag on margins * Enterprise volumes continue to grow, leading to profitability "sometime" in '07 (Nokia mgmt. hedges by saying "we're going to stay the course; we're going to get there") * Needed better mid-range products introduced and grow in volume * Nokia/Qcom IPR negotiations get completed and Nokia pays significantly less royalties - impacting Q3 and H2 EPS * Operating margins stabilize (return to 15 to 16% range possible??); mgmt. says it currently sees "proof points" for this * Emerging markets continue healthy growth; Nokia introduces new models using low cost single chip handsets; replacement sales (25% of market?)grow, with better profitability than "starter" units; Nokia has leading share due to buyer loyalty * Gains continue in N.A. and L.A. * Networks margin problems are eliminated from consolidated returns with Siemens merger * RAZR/slim form factor become mass market items and lose competitive luster * Demand for smart phones continues to soar with growth around 55/60% for year The negatives are the uncertainties of all the above plus the continuing competitive struggle with the products of the other members of the "big four". Added positives - and view of negatives? Sisuman