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

To: Rob L. who wrote (930)	8/27/1998 7:21:00 AM
From: tero kuittinen	Read Replies (1) \| Respond to of 34857

Not for me. I just made my aging parents to dip into their life savings and buy some Noka. That's what I think about the relevance of this Russian meltdown to Nokia. It's a human tragedy, yes. But Nokia has a bigger market cap than the entire Russian stock market. This disaster shouldn't really have an impact on Western economies. Even Finland doesn't export more than 3% to Russia, even though we have over 1'000 miles of common border. It's once again those Wall Street dandies living thousands of miles away from Russia and regarding it as some mythic empire, thinking that an economic collapse there must rock the world. Hardly. OK, the South America might be engulfed in devaluation mania and this might ricochet back to Asia... but that's a whole lot of ifs and I still don't see a direct link to Nokia's profit growth. South America is not their major strength and Chinese currency is still steady. Yes, all the threads are saying it's a great buying oppo... but for Nokia it actually is. The Russian connection has meant that Nokia has been slammed out of all proportion. Has everyone forgotten that Nokia, Ericsson and Motorola are not equal? Well, October is coming and the third quarter results will tell us the same tale as the second quarter did... only this sequel has far more FX. The first European survey comparing GSM 900/1800 dual-band phones just gave Nokia 6130 the first slot and the "Connect" magazine editorial recommendation. The 8810 is being unrolled amidst an innovative ad campaign: the stores are advertising the fact that the phone is sold out everywhere and you have to make a reservation to get it. It's weird, I know, but that together with the price has created a huge buzz. Some people are angry, some are amused, pretty much everybody talks about it. The cheap 5100 line has forced Nokia's competitors, including Ericsson, to steep price cutting to move the product... while the prices of 6100 and 5100 models remain rock solid. Since they are still selling out, Nokia has absolutely no incentive to cut prices. This is the first time I've ever seen Ericsson, Siemens, Sony and Motorola engaging in all-out price war... while Nokia keeps out of it. Motorola's last profit bastion, the priciest Startac models, are now under attack by 8810. The latest Motorola Startac was unveiled practically simultaneously with 8810 in Europe and Asia. Go to the Deja News, use prompts "8810" and "startac" or "star-tac" or even "motorola" and you see what the people in Singapore, Hong Kong, Australia, Norway, England, Italy, Germany and Finland are talking about. The third quarter will show disastrous losses in handset divisions of nearly every major GSM player... and possibly Nokia's highest profit margins since the halcyon days of early nineties. True, it looks now like the devaluation contagion could spread from Norway to Sweden. Problem is, while Finland joined ERM, Sweden kept out. So now Finnish currency is linked to Deutsche mark while Swedish currency is not. This might give Ericsson an edge. But they still don't have any new product on the market. A devaluation advantage can be used only if customers want what you have. Ericsson has made more tantalizing statements about hot future phones. But I'm not seeing any target dates. Where's the beef? They've already lost the 3Q... no way will they make the Christmas season, either, if they can't have first phones out before November. Motorola's new launches don't look all that firm, either. They are suddenly awfully silent about the precise dates of the TDMA roll-out. If Ericsson and Mot can't make firm commitments about launching in high volume in the next couple of weeks they will miss the 4Q. They both need new phones in several different segments, in Asia, Europe and USA. I think that's the big issue, not the latest Moscow tragicomedy. Tero