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

To: W D J Moore who wrote (745)	7/9/1998 5:55:00 AM
From: tero kuittinen	Read Replies (2) \| Respond to of 34857

David, timing could always be better with Nokia... the value of this stock has risen 45-fold in eight years. Don't I kick myself for not buying this puppy with my study loan and skipping university. But I think analysts are still misled. Here are some recent comments from leading foreign telecom experts as reported in Finnish newspapers: "I see no major marketshare shifts between the big three mobile companies", "Nokia's mid-term growth potential is around 25% annually", "Motorola will regain its number one position after it introduces the new digital models". The bittersweet love story between Mot and investment community just won't fade. As a result, Nokia is still undervalued in the long term. I don't think we'll necessarily finish the year much above 100 bucks. But in the next three-year period I really believe in 40% annual growth. There's some sort of miscommunication here... Nokia has stated in public that it believes in 25-35% annual growth. But Finnish companies always understate their goals, while American ones often are very bullish. Many US investment banks thought that OK, so the company itself predicts only 25% growth... pretty shabby. There's some sort of cultural gap here. What seems to be so hard to grasp for many international observers is the magnitude of Motorola's failure to capitalize its leadeship position. It has opened up China and USA for Nokia in a way that seemed impossible just two years ago. Motorola's only weapons were its superior brand and its huge production volumes. It has lost both. Now that Nokia has the world's biggest production volumes in its possession, I doubt it will squander the opportunity to take full advantage of it. Nokia's profit margin in handsets is around 18% - it could force Motorola into permanent quarterly losses by launching a price war. The second quarter is burdened by high expectations - but the results might beat them just the same. After all, 6100 was Nokia's first global product launch ever. Nobody really knows what happens to profit growth when the same model platform is launched simultaneously in USA, Asia and Europe. It has never happened before. The margins could be massive. Besides, European growth is once again beating the projections. Waves of new product launches are affecting the third and fourth quarter: the new cheapie 5100 is shipping in volume for the third quarter and a dual mode phone and a luxury entry will arrive for fourth quarter. The first models, 6100, 5100 and 8810 have all received the highest test scores I have ever seen in some European and African sources. Once again, nobody really knows what happens when a mobile company launches products for five different segments simultaneously. Never happened. But I would think that the competitive edge it gives Nokia is overwhelming - Nokia can utilize the latest display and battery technology in all its products within six months instead of doing one major launch per year and spending megabucks on R&D expenses each time. Motorola gave the first indication of what is the impact of Nokia's first wave of product launches - the result seems to be devastating. That's cool. But the real revolution is in the logistics... the way Nokia has sped up the product cycle while its major competititors are spinning their wheels, the way it has shifted to global product launches, the way it squeezes every buck out of its R&D by sharing features among its phones while carefully segmenting them. The impact of these changes have not been valued into the stock, so while "eight years ago" is always the correct time to invest in Nokia, this July isn't entirely stupid, either. Waiting until second quarter earnings and following WSJ articles arrive won't excatly present a buying opportunity. Tero