Too often, investors see the industries they invest in as being a winner take all environment. And yet, that is usually far from the case. And the smartphone industry is no different. Ever since the iPhone made its debut, the smartphone industry has been transformed, to the cheer of Apple (AAPL) shareholders such as ourselves. Apple's growth, however, has come at a huge cost to investors of other smartphone companies. Palm collapsed into the arms of HP (HPQ). RIM (RIMM) is drifting listlessly, and Nokia (NOK) has been all but written off completely. And it is Nokia that we would like to focus on in this article. We will break our analysis down into 4 parts: an overview of Windows Phone, Nokia's Lumia line, the company's financials, and the role Microsoft and mobile carriers will play in accelerating sales.
In the past 5 years, the stock charts of Apple and Nokia are mirror images of each other, with Apple rising by almost 400% and Nokia falling nearly 90%.
(click to enlarge)It is undeniable that Nokia has squandered its leadership position in the smartphone industry, much as RIM has done. Unlike RIM, however, Nokia is at least making an effort to cement a place in the market going forward. RIM seems unwilling, or unable to truly acknowledge the magnitude of the problems it faces and make the radical changes needed to be a viable player in the smartphone industry.
Nokia will never be able to recapture its former place in the smartphone industry. Industry leadership is now firmly secured by Apple, and we have full confidence that the company will maintain that position going forward. Samsung is set to be the #2 company. Third place, however, is up for grabs, and if Nokia executes its turnaround as planned, we expect the Finnish company to become the third smartphone company. We delve into Nokia's situation below.
Before we continue, however, we would like to remind investors, especially those who hold shares of Apple, of an important fact. It is unrealistic for any company, even Apple, to hold 100% of any market. The iPhone will never have majority share. It does not have to. What matters is profit share, and that is where Apple is winning. Apple earns 73% of the cell phone industry's profits with just 8.8% market share. Being bullish on Nokia does not mean one must be bearish on Apple. In order for Nokia to succeed at this point, it merely must prove that it can be a viable company. That is how low its share price has fallen. We believe that Nokia can (and will) survive. For investors with a tolerance for increased risk, an investment in Nokia could see a good deal of profit in the next several years.
Before we delve into the outlook for Nokia, we would like to make a note regarding the company's most recent quarterly results. While we will include figures and commentary from the company's conference call where needed, we will not be dissecting Nokia's first quarter 2012 results in great detail. That is because the Nokia turnaround will take more than one quarter, and we believe it is far more important to analyze where Windows Phone (and Nokia as a whole) will be going in the quarters and years to come than how the company did this quarter. With that being said, Nokia posted a loss of 25 euro cents per share in the first quarter of 2012 on an IFRS basis (international equivalent of GAAP). Profit in the first quarter of 2011 was 9 euro cents per share. On a non-IFRS basis, the company posted a loss of 8 euro cents. Revenue came in at 7.4 billion euros, compared to 10.4 billion in the previous year.
Windows Phone: The Last Stand of 2 Former Technology Stars
When Stephen Elop became the CEO of Nokia in 2011, expectations were high for the former Microsoft executive to revitalize the ailing company. Elop quickly aligned the company with Microsoft (MSFT), moving Nokia to the Windows Phone platform, and away from Symbian. Since then, Nokia's results have failed to meet expectations, and the stock has plunged over the past year as a result. For Nokia, the stake could not be higher. If sales of Windows Phone devices fail to rise in the next several quarters, it is likely that Nokia, in its current form, will cease to exist, or will be acquired like Palm. The company simply cannot afford the current pace of sales for more than a year or two. In the long-term, however, the stakes are even higher for Microsoft.
Windows Phone represents Microsoft's last chance to gain a meaningful presence in the smartphone/mobile sector. The future of computing lies in mobile, not the desktop, a fact that Microsoft realized far too late. Now, the company is rushing to catch up, pouring billions into the market in an attempt to cement its place as the #3 ecosystem. So far, the results have been mixed, based on most recent market share and sales data. Per research from IDC, Windows Phone's share of the smartphone market fell to 2.2% in Q1 2012, as compared to 2.6% in Q1 2011. Actual device sales, however, increased by 700,000 year-over-year, to 3.3 million. For Microsoft, which makes money based on per unit license fees, this is a positive trend, and serves as a reminder that profit, not market share is what matters in this industry. And according to Microsoft executives, Windows Phone has captured 7% of the market in China, surpassing the iPhone. Part of that is likely due to Nokia's strong presence in China (although China sales have suffered, something we will discuss in the financial segment).
Microsoft needs Windows Phone to succeed at all costs, and the company has committed itself, for better or worse, to Nokia. HTC and Samsung, despite manufacturing several Windows Phone handsets, have a clear preference for Android, and LG has largely abandoned Windows Phone in favor of Android. Given the state of the market, Microsoft had no choice but to turn to Nokia to boost the presence of Windows Phone in the market. The two companies signed a collaboration deal in 2011, and the Lumia line has been the result of that.
Lumia: Can The Phones Illuminate a Pathway to Profits?
Nokia's Lumia line of Windows Phones, which are currently available in the United States on the AT&T (T) and T-Mobile networks, represent a radical departure from the company's Symbian past. The Lumia line currently includes 5 devices, the Lumia 610, 710, the Lumia 800, and the Lumia 900 (a U.S. and global version), which serves as Nokia's flagship device (and by extent, the flagship device of the entire Windows Phone ecosystem).
Reviews for the Lumia have spanned a wide gamut of opinions. Business Insider said that the phone was "mediocre at best," and singled out screen quality and standby battery life as prime flaws in the Lumia 900. However, the site did praise the Lumia's interpretation of Windows Phone, saying that the operating system's social integration and the design of its applications are great. Business Insider thinks that while the phone is a solid choice for budget-conscious consumers, buyers with no price tag concerns should stick to iOS and Android. Engadget was more positive. While the site did call out Nokia for the Lumia 900's low-quality (relatively) display, which has a resolution of 800x480. Engadget praised the phones solid battery life (not on standby) and the speed of Windows Phone on the Lumia 900. Overall, Engadget sees the Lumia 900 as being a solid device for budget-conscious consumers (it retails at $99 on contract at AT&T, below the iPhone and high-end Android phones).
Both Engadget and Business Insider highlighted what is the operating system's biggest flaw at the moment: app selection. Aside from major apps such as Facebook, Spotify, and Twitter, there is a dearth of app selection in the Windows Phone app store. Microsoft, however, is working to fix that problem the same way it usually fixes everything: with the application of cash. Microsoft is paying developers tens of thousands of dollars to create apps for Windows Phone. A lack of apps is a vicious cycle. Customers do not want to buy phones on a platform with a lack of apps. And developers do not want to write for a platform that has a comparatively small installed base. With Microsoft's cash, however, writing apps is easier. And developers do think that Windows Phone will be a meaningful presence in the market going forward. As Sonos CEO John MacFarlane stated, "We're definitely watching it [Windows Phone] carefully. We believe it's going to be a player." The app selection issue will take care of itself in time, with Microsoft helping speed things along with cash. Once Lumia sales begin to accelerate, it will become easier to convince developers of the viability of the Windows Phone platform.
So how have Lumia sales been? It depends on where you look. On the company's first quarter earnings call, the company stated that it has sold 2 million Lumia devices in the first 3 months of 2012. The company has said that sales in the U.S. have been strong, and sales figures back that up. In the first quarter of 2012, sales in North America rose by 75% sequentially to $93 million, due to the introduction of the Lumia 710 (sales fell 34% year-over-year). While that $93 million represents a small portion of Nokia's overall device & services $4.246 billion in Q1 revenue, we expect that it will quickly increase as Lumia sales expand.
Here in the United States, sales of the Lumia 900 seem to be going well. As of this writing, the phone sits in the#4 spot on Amazon's best-seller list (it has fluctuated between #2 and #6 as we have been researching this article). Nokia's head of the United States, Chris Weber says that demand at AT&T is outpacing supply, and that customers love the fact that the Lumia 900 comes in a variety of colors. And the Lumia line, which recently launched in Nokia's home market of Finland, is doing well there, according to executives at 2 of the country's mobile carriers. In the U.K., however, sales could be better, CEO Elop admits. He said that the weakness in the U.K. was due in part to differences in how customers buy phones. Most Americans buy phones directly from their carriers, something that is not as prevalent in the U.K. Nokia is adjusting its sales practices for the U.K. market, Elop says. The question is, can Lumia (especially the Lumia 900) succeed? We think so. Checks done by Town Hall Investment Research show that sales are set to come in at a run rate of 1 million for the second quarter at AT&T alone, a number that is set to be significantly above Wall Street expectations. That figure does not include sales at T-Mobile or internationally. Where will those sales come from?
It is unrealistic to expect the Lumia line (or any Windows Phone for that matter) to steal meaningful share from iOS or Android. Users of those two platforms have deep ties to both ecosystems, which are not easily broken. The Lumia's real success will come from convincing users on a budget upgrading from feature phones to choose it versus paying up for an iPhone or buying a low-end Android phone. In addition, the Lumia is likely to sap share away from RIM. To its credit, Nokia is at least making a meaningful effort to salvage its smartphone business. RIM, on the other hand, appears to be unable to do so. In the months and years to come, it is likely that Windows Phone can take share from RIM. In any case, what matters is not market share, but profits. As long as Nokia can grow its overall Lumia device sales, the company has a chance to repair the damage that it has suffered. We turn now to the company's financials.
Financials: Falling Sales, Cost Cuts, Cash Burn, and Dividends
From a financial standpoint, the first quarter of 2012 was a bleak one. Overall revenue fell by 29% year-over-year to 7.354 billion euros, with smartphone sales falling 52% year-over-year, due to the decline of the legacy Symbian business. Smartphone average selling prices, however, improved sequentially to 143 euros, from Q4 2011's 140 euro ASP (ASP still fell by 2% year-over-year). Nokia's operating margin in the device & services segment fell to -5.2% in the last quarter, from 10.3% a year ago. However, as the company cautioned on its conference call, it is difficult to compare margins, due to changes in cost allocation related to the company's restructuring. It is important to note that the Lumia line has a higher margin than legacy Symbian devices, so as sales shift to the Windows Phone platform, margins should be set to rise. We will be focusing on Nokia's phone business, and not its other divisions (including Nokia Siemens Networks), because this is the division that will determine whether or not the Nokia will remain standing in its present form.
Revenue trends in the device & services division, Nokia's most important one, are concerning.
Of particular note is the huge drop in China sales. According to Stephen Elop, China sales have been impacted due to changes in how phones are bought. On the call, he stated that, "market conditions in China have changed and present a serious challenge to us. In the past, distribution of mobile devices in China was primarily through networks of distributors and resellers. However, operators are now rapidly driving bundled purchases of devices and data plans all at price points designed to increase the number of 3G data subscribers. This is happening at price points and configurations where we need to increase our competitiveness." An increased emphasis on 3G subscribers has put Nokia at a competitive disadvantage for the moment. However, the Nokia brand is still strong in China, and the launch of Lumia handsets in the country on China Telecom's (CHA) network should help Nokia stabilize sales in the country.
Declines in the Middle East & Europe were due to the simple fact that the Symbian operating system is no longer relevant, and an absence of region-wide Lumia releases. This too, however, is being addressed. At the 2012 Mobile World Congress, Nokia introduced the global version of the Lumia 900 (the U.S. version is compatible only with AT&T's network), which will be available this quarter. In addition, the company introduced the Lumia 610, and announced on April 19 that the Lumia 610 is rolling out across 7 countries in Asia. Nokia will be selling the Lumia in 30 countries as the second quarter ends. And the second quarter will be the first to have full sales in Brazil and Mexico. Given that Latin America sales declined only 3% year-over-year, it is likely that Nokia will be able to reverse the decline as Lumia handsets begin to sell.
From a financial standpoint, the transition to Lumia sales will be accretive to Nokia. The Lumia line has an average selling price of 220 euros, as opposed to an average selling price of 143 euros for the company's overall smartphone business. Nokia has stated that it has seen sequential growth in Lumia activations every month since November 2011, when Lumia sales first began.
Nokia's outlook for the second quarter reflects the fact that it will take time for the company to shift more sales to Lumia handsets as opposed to Symbian ones, and it reflects the challenges that Nokia faces in its feature phone business, which it is responding to with revamped products, as well as the low-end Lumia 610. Nokia expects its IFRS operating margin for the devices & services segment to be at or below the -3% level reported in Q1 2012, due in part to the ramp up of Lumia sales on a global scale. For Nokia as a whole, the second quarter will also depend on results at Nokia Siemens Networks, and the costs cuts the joint venture with Siemens (SI) has initiated. Non-IFRS margin at Nokia Siemens Networks is set to rebound into positive territory in the second quarter, from -5%.
Nokia is also on track to cut more than 1 billion in costs. CFO Timo Ihamuotila, however pledged on the conference call that Nokia will accelerate its cost cutting as well as make deeper cuts by 2013. Helping the company will be its patent portfolio. The company stated on the conference call that its annualized royalty run rate currently stands at 500 million euros, and that its royalty income is growing.
We turn now to cash, seen by many as the most concerning element at play here. In the first quarter of 2012, Nokia's operations burned 590 million euros of cash, as compared to a burn rate of 173 million euros in the previous year period. That being said, operating cash flow was impacted in the first quarter of 2012 by several non-recurring items that will likely be absent from Q2 results. CFO Timo Ihamuotila provided a deeper than usual analysis of cash flows on the call.
In the first quarter cash flow in the devices & services division was negative 600 million euros, due primarily to changes in working capital. The company's accounts payable declined more than its accounts receivable and inventory accounts. As a result, Nokia's cash conversion cycle was negatively impacted. Overall, over half of the cash burn Nokia posted in the first quarter was due to working capital changes. Going forward, Nokia sees these items as being non-recurring in nature and that they will be absent from the second quarter. In addition, the cash flow dynamics of the agreement with Microsoft favor Nokia. Cash burn is certainly an issue at Nokia, perhaps the main issue. But the company is moving aggressively to cut costs, and with over 122,000 employees, there is ample room for cuts. In the quarters to come, investors will have to observe costs carefully, as Nokia's expense profile is meant for companies of a larger size, something Nokia admits to.
Nokia's net cash position has declined due to its losses and cash burn, falling to 4.872 billion euros, compared to 6.372 billion euros in net cash a year ago (the company has cash of 9.793 billion euros and debt of 4.921 billion euros). Rating agencies have moved swiftly to downgrade Nokia, with S&P cutting its rating to junk (to BB+ from BBB-) at the end of April, and Fitch has done the same.
Fitch has warned that unless Nokia can reverse its decline within the next 18 months, its cash reserves could be depleted. However, the Lumia launch on AT&T, as well as further Lumia launches could be positive for Nokia's credit profile, Fitch writes. Moody's has cut Nokia's debt to nearly junk, with the rating cut to Baa3. The core of Moody's cut was centered on the firm's belief that "the structural challenges facing Nokia's mobile phones segment may not be easy to address, such as the market share gains recorded by makers of very low-end phones or new phone promotions by Chinese carriers." Nokia has a deadline to turn around its business, and that deadline is based on its debt maturities, which are outlined on the company's website.
Nokia has 1.047 billion euros in short-term debt due within the next year, which are included in the company's net cash calculations and consist of commercial paper and other short-term borrowings. The company 1.25 billion euros of 5.5% debt due in 2014, and that is the bond that has analysts most worried. Nokia may have billions of euros in net cash, but that cash balance is going the wrong way, and unless the company can reverse its decline within 2012, its ability to pay its debt will be severely challenged. That is why cash flow will be a top priority. It is paramount that Nokia's pledge to accelerate cost cutting past its stated 1 billion euro goal is completed as quickly as possible. The company's second and third quarter results will be the ones that determine whether or not Nokia can reverse its trajectory in regards to cash. Nokia must show that it can bring cash in the door in non-holiday quarters. The rest of Nokia's debt is more long-term. The company has 500 million euros of 6.75% due in February 2019, and $1 billion of 5.375% debt due in May 2019. The remainder of its debt, a 500 million euro 6.625% note, is due in May 2039, and as such it is not material for the time being.
Perhaps the most perplexing thing surrounding Nokia's financials is its dividend, which the company has opted to continue. Analysts questioned the company on its conference call about the dividend, as it would seem on the surface that Nokia would have to cut its dividend. CFO Timo Ihamuotila said that the company had nothing to say at that point in time, and that the issue would be decided at its annual meeting in May. At the annual meeting, the board voted to approve a 2012 dividend of 20 euro cents per share. While that may be down from the 2011 dividend of 40 euro cents per share, the company is still sending hundreds of millions of euros (749 million to be exact, based on the company's 3,744,956,052). There are several ways to analyze this payout. On the one hand, the company cut its dividend by half, clearly aware that it's financial profile has deteriorated to the point where it cannot afford its historical dividend. On the other hand, Nokia's dividend has been maintained, which could imply that the company sees its future financials and cash flow as improving from where they currently are. Otherwise, there is no reason to maintain a dividend if sending cash out the door would threaten the company's viability The company's ADR's currently yield almost 9%, given how far the stock has fallen so far in 2012. We believe that Nokia is walking on very thin ice with its dividend. Sending 749 million euros out the door while the company is in such a transition is risky. We would have preferred to see the company err on the side of caution and either pay out only a token dividend or suspend it entirely. For long-term shareholders, it is better for the Nokia to have the cash it needs to complete its restructuring rather than have the company use up its cash to satisfy shareholders now, only to find itself in a cash crunch down the road because of it.
Overall, Nokia's financial picture is murky. The company has billions of euros in net cash to serve as a cushion as it restructures, but that cushion is becoming smaller each quarter. The stock trades far below book value, currently at 2.94 euros ($3.68 at current exchange rates), but unless the company can reverse its decline in book value, that metric means little Debt is not an issue until 2014, and by then it will be clear if Nokia can survive. The company's cash flows should improve in the next several quarters as working capital conditions improve and the company transitions to the Lumia line. However, should Nokia rove unable to accelerate Lumia sales to necessary levels, there are 2 forces that stand ready to help: Microsoft and the carriers. We now turn to our analysis of Nokia's partners in its mission to transition to a Windows Phone future.
Microsoft, Patents, and Carriers: Nokia's White Knights
If Nokia cannot successfully continue to accelerate sales of Lumia devices, Nokia itself will not be the only thing that fails. It is likely that Windows Phone as a whole will fail as well, for Nokia is the only OEM that is wholly committed to the platform. LG has abandoned it, and HTC and Samsung are making only token efforts with it. For Microsoft, however, the stakes are even higher. Should the company fail with Windows Phone, it will lose any chance of competing in the mobile computing market, where the future of computing lies. In the long-term, Nokia's failure would be more costly to Microsoft than Nokia (in terms of dollar amounts), because it would mean Microsoft has lost the mobile market, which alongside cloud computing, is the company's biggest threat. For Nokia, Microsoft's commitment to Windows Phone is what is likely to save the Finnish company [at the very least, Microsoft's historical willingness to throw billions of dollars out the door at unprofitable ventures (Bing) essentially guarantees that it would assist Nokia in the event the company runs into a financial crisis]. Microsoft knows that the stakes are too high for Nokia to fail.
Analysts generally agree that Microsoft would step in to assist Nokia in the event of financial difficulties. Nomura writes that, "the helping hand would be there." Investment bankers who work in the technology sector (all of whom speak off the record), say that an outright takeover of Nokia is unlikely, as Microsoft does not play in the hardware business. A loan or equity stake is more likely, and in such an outcome, shareholders should happily accept Microsoft's assistance. Microsoft's payment terms would likely be far more palatable than those of the debt markets, and a dilutive share offering is better than bankruptcy. In any case, Microsoft already pays Nokia $1 billion annually for using Windows Phone, as per the agreement the two companies signed upon Stephen Elop's arrival at Nokia.
Most of Nokia's assets are not a potential solution to the company's cash situation. According to sources close to the company's executive team, Nokia is in talks to sell Vertu, its luxury phone subsidiary, to private equity firms. But a sale, if it occurs, is likely to only bring in a few hundred million euros in cash, and if Nokia continues burning cash for multiple quarters, that will not be enough. And the company's other assets are unlikely to be monetized. Talks to sell Nokia's 50% stake of Nokia Siemens Networks collapsed in 2011 over price, and in the current macroeconomic environment, we see no reason why a larger offer for Nokia's stake would materialize. As for Nokia's Navteq division, the company has made it clear that it sees Navteq as a core part of its strategy going forward, and the company is unlikely to sell. CEO Elop himself has said that Navteq is a core asset that Nokia wishes to keep. However, Nokia has an asset that is becoming increasingly important in the smartphone market: patents.
Nokia has thousands of patents in its IP portfolio, and many of them are not subject to FRAND standards, which mean little in the patent wars that are occurring in today's smartphone market (some market observers argue that it is Nokia that started these patent wars with its suit against Apple in 2009). And it is these patents that could prove to be the company's "ace in the hole." Bankers see Nokia's patent portfolio as the "best in the industry,"and as a result, these patents could prove to be either of great help, or a great threat, depending on who would own them after an auction. Stephen Elop, however, stated at the annual meeting that there will not be any wide patent sales. That is, according to industry bankers, what Microsoft wishes, because these patents would likely prove to be a nightmare if they fell into the hands of Google (GOOG). And that is why these patents are Nokia's ace in the hole. Even though Microsoft has likely told Nokia that it does not want to see its patents for sale, Nokia is still an independent company and is free to sell assets as it wishes. If and when the company decides to begin selling patents, the bidding for them will be fierce. And Microsoft, with tens of billions in net cash and huge cash flows, would likely pay a large premium to keep them out of Google's hands. Or, Nokia could use its patent portfolio as leverage in financing negotiations if Nokia's finances deteriorate to that point.
Microsoft is not the only party interested in seeing Nokia succeed. Wireless carriers across the globe want to see Nokia transition to Windows Phone, for it represents what is likely the last chance to create a third ecosystem to compete with iOS and Android. Carriers have an interest in seeing a third ecosystem. It allows for more customer choice and increased leverage in negotiations with Apple and Android manufacturers. Apple is able to post the profits it does because it is essentially able to dictate terms to carriers, due to the insatiable demand for iPhones among their customer base. The subsidies, however come at a short-term cost for carriers, and these are costs that take years to recoup. As a result, carriers are hoping for a hit in the Lumia series. In the United States, for example, AT&T is spending heavily to promote the Lumia. According to a company spokesman, "we don't put this weight behind every launch." They added that the Lumia is sold out in many stores. For its part, T-Mobile has said that the Lumia 710 is among its most popular devices. That being said, carriers remain unconvinced of Lumia's potential. Industry consultants agree that carriers are frustrated that Microsoft, given its fortress balance sheet, has not stepped up and financed increased marketing. They see carriers as willing to help Microsoft and Nokia compete if the companies will step up to the plate with an aggressive marketing plan. One device executive at a European carrier said that, "We can open our stores to them and train our staff to sell the phones, but that's it." Nokia and Microsoft (with most of the cash coming from Microsoft) will have to accelerate their push of Windows Phone and ensure that consumers are aware of the platforms benefits. Microsoft will have to continue subsidizing app development, and Nokia must ensure that its designs and hardware quality are superior to its price point peers.
Ultimately, we believe that in the event of a financial crisis at Nokia, Microsoft will be there with financing. Microsoft knows that Nokia is its last chance to compete in the mobile market, and letting Nokia fail would be a disaster for Microsoft in the long-term, as the stakes are too high. We believe that Microsoft will be Nokia's "white knight" in the event of a crisis, and that Nokia will, one way or another, fully transition to the Windows Phone platform.
An investment in Nokia is risky, but we believe that for risk-tolerant investors, it is a worthwhile one. Lumia sales are growing, and Nokia has released the devices into dozens of countries. The company's financials, while certainly precarious, are not yet in the danger zone, and the company still has billions of euros in net cash. And the company has a deep-pocketed backer in Microsoft. The software company is wholly committed to both Nokia and Windows Phone, and will almost certainly come to Nokia's aid if the company is in need of financial assistance. Carriers want to see Nokia succeed, and are prepared to help. We think that if sales do not grow to acceptable levels, Microsoft will step in and finance increased marketing. We want to remind investors that this is not a bearish call on Apple, or Google. We believe that shares of both companies are a buy, and Apple is our largest direct position. Rather, this is a call based on our belief that there is a place for a third operating system in the smartphone market, and that it will be Windows Phone, and not RIM. To earn a place as a leader in the smartphone industry, Nokia has to convince feature phone users (in particular budget conscious ones) to upgrade to Windows Phone. Additional growth in the user base will likely come from BlackBerry users who are set to abandon RIM. Unlike RIM, Nokia has shown a willingness to change, and has the backing of a technology giant, something RIM does not. For patient investors willing to take on some risk, we believe that shares of Nokia, at these levels, present a buying opportunity.
Additional disclosure: We are long shares of MSFT, HPQ, and T via the SPDR Dow Jones Industrial Average. We are long shares of GOOG via a mutual fund that gives the company a weighting of 2.23%. We plan on buying shares of NOK within the next several days.