Jabil's Mobile Comments Lift Nokia

Nokia (NOK) shares are up sharply today, thanks in part to some bullish commentary on the mobile sector on contract manufacturer Jabil’s (JBL) post-earnings conference call late yesterday.

According to a transcript of the call, Jabil investor relations VP Beth Walters said that “the mobility sector increased 8% from the prior quarter, primarily as a result of growth in volumes with our largest customer in this sector.”

Tero Kuittinen, analyst with Global Crown Capital, notes in a research piece today that the customer Jabil was referring to likely was Nokia. He says Nokia shares “took off like a bottle rocket” in trading in Helsiniki earlier today, as the markets took the Jabil news “as a sign that markets have been miscalculating the global handset volume strength this summer.” He says that sector sentiment swung to extreme lows “as various dubious rumors about China and India circulated over the past couple of weeks.” Feeding the panic, he says, was the reduction of global unit numbers by some leading analysts.

Kuittinen contends investors should be buying Nokia shares ahead of the company’s Q2 results. “It is quite likely that industry observers panicked over the recent steep decline in Nokia’s share price and decided to cut phone volume projections as a response,” he writes. “This very human response ended up setting up the past week’s Nokia sell-off just before we start getting tangible information about decent Q2 volumes. There is now a reasonably good chance that Nokia and the rest of the phone sector will enjoy a decent bounce - particularly as Qualcomm’s (QCOM) largely ignored positive commentary is given a second look after the Jabil report.”

NOK closed today is up $1.44, or 5.8%, to $26.10.

Comments

[steveballmer]

Does not work on iPhone!