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

To: Stock nerd who wrote (504)	1/24/1998 5:13:00 AM
From: tero kuittinen	Read Replies (2) \| Respond to of 34857

Hi nerd (aren't we all in these groups), that's a tough call. Certainly Qualcomm stock price will zoom during the next couple of years. But I just feel a lot more comfortable with Nokia right now. First of all, Nokia has been proven to be a very tough competitor in tightly contested markets. There are now over 20 companies selling GSM phones in Europe and Nokia pretty much clawed its way to the top, beating companies like Motorola, Siemens, Sony etc. I'm very impressed with that track record. Qualcomm has faced no competition in handheld market and this year it will have to. It's anyone's guess whether the company is competitive or not. When you actually look at the products of these companies, Nokia obviously has an edge. It is introducing a sub-100 gram phone in Japan next month; the gadget has voice-activated dialing and other advanced features. Nokia is the only mobile phone company with a widely available smart phone product on market; the 9000 model has www & fax capabilities, has picked up a ton of awards from BYTE magazine, Business Week etc, is selling in six figures in four major continents. The new 6000 models have been introduced simultaneously in Asia, Europe and USA and have many very impressing features. It obviously has far superior display, software and talktime compared to Qualcomm phones. I suggest you actually go to some shop and compare Qualcomm phones with the new Nokia 6000 series models currently being launched in the States and you see what I mean. Productwise, Nokia has an international presence and wideness or product range that makes Qualcomm look like it has a pretty narrow scope. Qualcomm has no presence in Europe, while Nokia is strong in Europe, Asia, Australia and USA. I'm very sceptical about Qualcomm's exports to Korea after the recent devaluations. However, Nokia's main market in Asia is China, which has not devalued and has vowed not to. Which brings us to the enormous recent infrastructure deals made in China by Nokia and Ericsson. GSM has had such explosive growth in China during the last year that no expert forecast anything like that in 1996. China looks very much like the healthiest economy in Asia right now, plus it boasts a much larger population base than Korea or Japan. So I guess the main strengths of Nokia are the wide product range (an entire family of competitive products ranging from the very cheap to executive class); the widest range of products in different formats (CDMA, GSM, TDMA, the Japanese standard, NMT, etc.) among cellular companies; the geographic sweep; the resurgent infrastructure strength; the influence in creating the next generation mobile standard for Europe and Asia; and the key technological leading position in two important sectors: display technology and software. Check out the display of the latest model and the call grouping & infrared options in the same phone and you see what I mean. What worries me in Qualcomm is the narrow focus of the company. Many experts think that only two biggest cellular companies in the world will truly thrive in the next decade, reaping most of the benefits of the mobile explosion. I think that Qualcommm cannot really prosper as the collector of licensing revenue: no company has really risen to global prominence on that platform alone. It has to succeed as a vendor as well. When competition truly arrives to CDMA phones Qualcomm's success is anything but guaranteed. Besides, I think that the technological edge of GSM phones will be maintained and at some point this will start to have an impact on CDMA's global prospects, especially in Asia. Moreover, the fact that Nokia is a very successful infrastructure vendor cushions this stock from the swings in the handset market. Qualcomm lacks this advantage as well. About long term - if Nokia can really push through the Nokia/Ericsson model for 3G, even if it implements some compromises with the Siemens/Alcatel model, the future looks bright indeed. Americans keep slamming the third generation mobile phone solutions; please read articles from European sources to get a balanced view. Yanks are upset about this development, because it means that Asia and Europe will have a common mobile standard from 2001 onwards, backed by the biggest, richest and the most influential companies in the business: Nokia, Ericsson, Siemens, Alcatel, NTT, the big Japanese companies, etc. Meanwhile, USA is stuck with a fragmented home market divided between three different standards and no major companies with a big bet on 3G systems and handsets. No wonder there is such rabid hatred and fear of the third generations in USA... if you believe it is vaporware, check out the estimates on how much the companies are investing in it. I believe the sum is literally in the billions of dollars. Tero