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

To: Paul Shread who wrote (739)	7/8/1998 7:39:00 AM
From: tero kuittinen	Read Replies (2) \| Respond to of 34857

The magical number is minus one. Yes, it's there buried between "The currency-related impact on pricing and consumer confidence continues to affect the Asian region and Motorola," Motorola Chief Executive Officer Christopher Galvin said in a statement Tuesday. and "The earnings were better than expected," said Mona Eraiba, an analyst with Gruntal & Co. and "They had operating earnings -- that was a plus," said Robert Wilkes, analyst for Brown Brothers Harriman. Disregarding the hype, disregarding the David Copperfield trick of burying a big chunk of the losses in a one time charge and then reporting a "quarterly profit"... what you have is that number. Minus one percent growth in cellular products, the biggest division. This is the turning point... this is the break-out quarter. Nokia is going to report sales growth at least around 40% in cellular products. The contrast to Motorola isn't "stark" anymore... it's well beyond "incredible"... this is one of those Motorola Moments that challenge description. I dare Fortune not to run a cover article on Jorma Ollila before Christmas. Remember, Motorola's P/E ratio is still almost the same as Nokia's. There is something seriously out of whack in the way Wall Street values these two companies and the day of atonement draws nigh. If Nokia comes through with its 40%-50% growth in cellular phone sales and 30%-40% growth in infrastructure equipment sales it means that Motorola is now losing at least 3-5% of global market share to Nokia per quarter in both categories. Move over, Zenith... you've got company. I'm here to tell you that Nokia is the reason to the depth of Motorola's woes. It is no coincidence that Nokia's 6100 phones started selling in volume in the second quarter of 1998 and Pow! Mot picks this moment to come undone. There is cause and effect here. Nokia has finally snapped the spine of Motorola's handset division... instead of growing at a sedate 10% annual rate like some loathsome slimemold it has finally been brought to a dead stop. Blaming China for the situation seems to be what the analysts want to hear. And they are just lapping it up. But what happens when Nokia reports that China was its hottest growth market in the second quarter? Will that ring some bells among the analysts? Besides, Motorola's collapse in Europe must be epic. Mot phones have to be selling relatively well in USA... Mot is the only provider for Nextel and that operator is hot as a pistol. So the only way you get an overall sales number this dismal is if you're having a near-death experience in either Europe or China, possibly both. These results were way better for Nokia than anyone anticipated. They mean that Nokia is now pushing Motorola to well below 20% global market share in handsets for the full year, possibly as low as 18% or 16%. Nokia could conceivably pick up 24% or even 26% if Mot's decline continues. This was not in the script... and it's not in Nokia's valuation. Tero