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

To: Shoibal Datta who wrote (614)	4/21/1998 6:54:00 PM
From: Lazlo Pierce	Read Replies (1) \| Respond to of 34857

First Call has a mean on Nokia FY98 of 2.30, and FY99 of 2.75. So the forward P/E is ~ 28. For comparison seew LU (though not direct competition) They are est to earn 1.56 and 1.85 respectively, and is selling for over 70 now. Nokia has been growing at a higher rate than its P/E, and 28 in this market is not pricey. Also, Nokia has a good chance to beat these #s handily. IMHO there is more room to run, a market correction notwithstanding. Dave

To: Shoibal Datta who wrote (614)	4/22/1998 5:28:00 AM
From: tero kuittinen	Read Replies (2) \| Respond to of 34857

I don't think that the markets are fairly evaluating Nokia yet (surprise!). David had some good points; Ericsson and Lucent still have higher P/E ratios. American investment banks keep forecasting 25% annual growth for Nokia and don't see any market share gains in the near future. I might add here that back when Nokia had 10% share in mobile phones investment banks didn't foresee any further gains and kept pointing out that the profit margins are under siege. The analysts have been dead wrong about Nokia's prospects for ten years and I see no real change taking place. Show me one American analyst who foresaw Nokia's intense infrastructure resurgence and the operating profit rise in 1997. I don't think there were any. I still haven't see any business journalist pointing out that Nokia will rise to world's number one manufacturer of mobile phones in 1998 even though it's highly likely. American business writers keep cranking out articles about Motorola's "come-back" or "restructuring". Nokia's success story is a terse one-line comment in these articles. Usually something like "Even though Motorola has been refocusing with vengeance, much remains to be done before it catches up with its nimble Nordic competitors.". All sorts of yankee geeks from Mark Andreessen onwards are completely eclipsing Nokia in the international business journalism. Nokia's overall company strategy is much more focused than its biggest competitors' and some of the results will take years to become apparent. Nokia has Ericsson and Motorola beat hands down when it comes to design and style, for example. The company hired expensive European designers to help it create unique models and the results are beginning to show: whereas major competitors keep cranking out boxy, boring clones of their earlier successes (witness Ericsson 888), Nokia is really breaking new ground with organic, fluid style of the new phones. Another point is shedding slow growth businesses: Nokia jettisoned the television business, but Ericsson kept its infocom unit and Motorola its semiconductor and pager units. Result: Nokia is the only one of the three that is really a pure mobile play. Manufacturing strategy is also pretty stellar: Nokia introduced new display and battery technology last February. By next July these new advances will be incorporated in new models in all four major product segments, from the cheapest 5110's to the ritzy 9110's. No other company does complete makeovers this fast. As far as sales strategy is concerned, Nokia is a forerunner: it's the first company to introduce a new model concurrently in Asia, Europe and US markets. This maximizes profit margins and takes full use of economies of scale. Comparison: it took Ericsson almost two years to introduce 788 in the States after the European launch. Motorola has been as sluggish in expanding the Startac sales. Conclusion: I don't think the stock price of Nokia really reflects the visionary genius of Our Beloved Leader, CEO Ollila. Seriously, the many advantages Nokia currently holds will only become evident in the next two years. The market hasn't yet quite grasped what's going on. Tero