Falling in Love With Nokia
Nokia is the Dell of cell phones when it comes to manufacturing and Apple when it comes to innovation.
I look at the enterprise segment's bad performance in the quarter from a glass-is-half-full perspective. Nokia has licensed "push technology" from Blackberry and is already rolling out new phones that are equipped with it. Just a couple of years ago, Nokia was bleeding money in the multimedia phone segment as it lacked compelling product offering and adequate scale. Today Nokia's multimedia phone margins are almost equal to its most profitable mobile phone segment. I believe enterprise will get fixed and will become profitable over the next couple of years, further helping Nokia's overall margins to get on track.
Valuation: My firm owns a boat-load of Nokia stock, however, we are not buying more of it at today's price as its margin of safety has been undermined by a significant price increase (a problem I love having). Nokia is trading at 20 times 2006 (yet to be revised up) estimates. However, Nokia is the perfect candidate for growth managers to fall in love with: pristine balance sheet with over 10 billion euros of net cash, great return on capital, both sales and earnings growing and at double digits with no end in site and of course, the best part: profit margins still have plenty of room to expand. And if all that was not enough, earnings estimates will be revised upwards.
Nokia is the Dell (DELL) of cell phones when it comes to manufacturing and Apple (AAPL) when it comes to innovation. It seems that it is putting its two year slump behind, introducing new exciting phones all over the world and embarking on the growth mode once again.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Daily Recap Newsletter