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

To: Eric L who wrote (5607)	5/4/2008 7:44:30 PM
From: sisuman	Respond to of 9255

Thanks Eric for the good data from the Lehman report – and for ruining my weekend as I embarked on spending some time “data mining”. Hopefully, I learned something worthwhile about wireless market prospects. ‘Course that assumes that Lehman is relatively infallible with their forecasts – to be seen as 2008 and 2009 play-out. Here’s what I feel that I learned, that I hope will be of some relevance to the readers. 1. Market growth prospects o Total market growth for ‘07/’08 is projected as +140 million units or +12.3 % o Total market growth for ‘08/’09 is projected as +118 million units or + 9.2% - a distinct slowdown. 2. Market growth by technologies – ‘07/’08 o WCDMA growth – 105 units = +60% o CDMA growth - +14 million units = +6.7% o GSM et al growth - +11 million units = + 1.4% 3. Market growth by vendor – ‘07/’08 o Nokia - +42 million units o Samsung - +23 million units o MOT - +1 million units o Sony/Eric - +10 million units o Other - +30 million units (Note: seems relatively too high). 4. Market growth by technologies – ‘08/’09 o WCDMA growth – 120 million units = +43% o CDMA growth - +13 million units = + 5.8% o GSM et al growth – (14 million units ) = (1.8%) 5. Market growth by vendor – ‘08/’09 o Nokia - + 51 million units o Samsung - + 25 million units o MOT - + 7 million units o Sony/Eric - + 22 million units o Other - + 14 million units 6. Where does Nokia’s growth come from? o ‘07/’08: i. WCDMA - +42 million units/+65.6% ii. GSM mid - +16 million units/+17.4% iii. GSM low - +15 million units/+5.6% iv. CDMA - + 2 million units/+15.4% v. Total - +74 million units/+16.9% vi. 7. Where does Samsung’s growth come from? o ‘07/’08 i. WCDMA - +23 million/+85% (!!!???) ii. GSM mid - + 8 millionunits/+20% iii. GSM low - +13 million units/+27% iv. CDMA - +5 million units/+11% v. Total - +49 million units/+30.4% 8. Where does Nokia’s growth come from? o ‘08/’09 i. WCDMA - + 51 million units/+47% ii. GSM mid - + 11 million units/+10.2% iii. GSM low – (9 million units)/(3.2%) iv. CDMA - + 2 million units/+13.3% v. Total - +56 million units/+10.9% 9. Where does Samsung’s growth come from? o ‘08/’09 i. WCDMA - + 25 million units/+50% ii. GSM mid - + 1 million units/+2% iii. GSM low – (9 million units)/(14.8%) iv. CDMA - +9 million units/+18% v. Total - + 25 million units/+11.9% vi. MEMO 1: Based on all of the above data it appears obvious that the big fight for growth will be regarding WCDMA MEMO 2: The above data for Nokia and Samsung indicates that GSM et al growth has peaked and is on a slow decline. Does this mean that post-2009 we can expect to see ASP’s rise? Or will the high level of competition between vendors keep ASP’s low? 10. What is going to happen to Nokia’s market share in various tech areas as Samsung pursues aggressive growth? o Nokia – ‘08/’09 i. WCDMA – grows from 39% to 40% ii. GSM mid – grows from 43% to 46% iii. GSM low – stays same at 54% iv. CDMA – stays same at 7% v. Total – grows from 40% to 41% o Samsung – ‘08/’09 ? WCDMA – grows from 18% to 19% ? GSM mid – stays same at 19% ? GSM low – drops from 12% to 10% ? CDMA – grows from 23% to 25% ? Total – grows from 16% to 17% ? MEMO 1: MOT and Sony/Eric shares stay flat overall MEMO 2: Sony/Eric WCMA share increases from 16% to 17% MEMO 3: Would Samsung be interested in buying out Sony/Eric in order to increase its market share from 19% to 19+17, or 36%, in order to better compete with Nokia at the high end? 11. Samsung keeps running very fast, but Nokia manages to retain its same market share across all lines – and increases its units lead. Samsung must steal share from others in order to grow. o WCDMA – Nokia Units/Share differential over Samsung rises from 39 million units/22% share in ’07 to 84 million units/21% share in ‘09 o GSM mid – Nokia differential rises from 52 million units/22% share in ’07 to 70 million units/25% share in ‘09 o GSM low – Nokia share differential rises from 219 million units/42% share in ’07 to 22 million units/44% share in ‘09 o CDMA – Nokia negative differential worsens from 32 million units/16% share in ’07 to 42 million units/18% share in ‘09 o Total – Nokia share differential rises from 277 units/16% share in ’07 to 333 million units/24% share in ‘09 12. As annual market volume growth slows to single digits, can Nokia raises its profitability through the trend to increased WCDMA sales and higher priced replacement units? 13. Can sales and profits from services increase fast enough to offset declines in handset sales volumes growth? 14. Can MOT and Sony/Eric. Stay in business despite low profits and poor growth prospects? All the Lehman data/forecasts are so interesting, but very speculative for 2008 and 2009. Te data seems to say that we can expect Nokia to hold its leading position in sales volume, market share and profitability – hope it’s a good crystal ball that they have. And, like you, Eric, I may have some mistakes in here. Sisuman