Jacob Steinberg's  Instablog

As a lot of people are putting their hands on Nokia's (NOK) Lumia 920 for the first time, they are sharing their experiences with other people on the internet. So far, the reaction has been very positive. Many people, including me, criticized Nokia for its marketing efforts, which could be described as "weak" at best. On the other hand, it looks like Nokia will let Lumia 920 speak for itself as the encouraging words on the phone continue to spread like wildfire.

ZDNet's Matthew Miller has been using the phone for a few days and he describes his initial experience with the phone as great, and goes on to say that "I have to say the sensitive display, wireless charging capability, Nokia Music service, Nokia Drive software, and camera performance have been great so far." On a negative note, he also says that in the beginning, the phone doesn't feel much different than how Lumia 900 felt in his hands. CNET allows users to rate the phone. So far, 10 people rated the phone and 9 of the raters gave it 5 stars. PC-Tablet's Mary Rose rated the phone with 4.5 stars. Some people who chose to wait for Lumia 920 rather than buying another brand reportedly said that the phone was well worth the wait.

Techno Buffalo's Todd Haselton joined those that gave the phone positive reviews when he checked the phone out. Mr. Haselton says: "I really think Nokia has a winner here. The Lumia 920 is an improvement on the Lumia 900 in nearly every way, but it doesn't ditch anything. You still get the great polycarbonate body, only in even more colors this time, a faster processor, Windows Phone 8, a beautiful display, NFC and more."

As someone who believes in the effectiveness of word of mouth, I find this highly positive. Lumia 920 never made as much noise in the media as Apple's (AAPL) iPhone or Samsung's Galaxy series did; however, the reaction to this phone is overwhelmingly positive. I would rather Lumia 920 to get 9 positive and 1 negative review than it to get 70 positive and 30 negative reviews. Lumia 920 reminds me of the pro-wrestling segments from 1980s. Back then there were "bad guys" and "good guys" in wrestling. The bad guys would come to the ring with a microphone, give a lengthy speech about how they were going to destroy their opponent. Finally, the good guy would come out and destroy the bad guy without saying much to the audience. The good guy would just "speak in the ring" rather than to the microphone. It looks like Lumia 920 is taking on this role.

As Nokia launches its new phone in multiple countries, the media continues to speculate about a possible Microsoft (MSFT) smart phone. As I said before, I strongly believe that Microsoft keeps this idea in its back pocket in case things don't work out for Nokia. I seriously don't think Microsoft will stab its partner in the back by building its own phone. Besides, the company lacks much experience and patents in this field; thus, it wouldn't be wise for Microsoft to jump the gun here. If Nokia failed, I wouldn't mind Microsoft buying the company's mobile device segment and go from there, but at the moment, it is too early for Microsoft to build a smart phone. The speculators say that Microsoft is in talks with a number of Asian manufacturers to test the Apple model. Apple stays away from the manufacturing side as the company only focuses on designing its products. This allows the company to maintain high margins while letting other companies worry about the manufacturing side. Nokia gets its supplies from other companies, but ultimately the company builds its own phones in its own production plants. When or if the time comes, Microsoft can pick either the "Apple model" or it can simply acquire Nokia and go from there. For the time being, I don't think Microsoft will be building a phone.

In fact, a story that was published at Bloomberg's website on Friday is mostly in line with an article I wrote months ago. Bloomberg's story also implies that Microsoft's phone building efforts will be part of the company's back-up plan rather than the Plan A.

In less than 2 weeks, Lumia 920 will be in markets in the US. Once that happens, it will be all about marketing efforts. Many consumers aren't happy with the restricted supply of iPhone 5 in addition to some software issues, such as the ones in Apple Maps. This is a great chance for Nokia to capitalize the negative sentiment around Apple. The company's marketing efforts should focus on Lumia 920's strengths over the phones of the competition, and once enough copies are sold, the word of mouth will spread very quickly. When a product is so well that it speaks for itself, marketing the product shouldn't be too difficult.

Disclosure: I am long NOK, MSFT, AAPL. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

It looks like Facebook (FB) is back to the free-fall mode it had been in since the overly hyped IPO of the company. A couple weeks ago, the company's share price recovered for a little bit when the company's CEO Mark Zuckerberg asked investors to be patient for a couple years, and told them that the company was working on a new mobile advertising network; however, the free-fall picked up from where it had left off when the analysts covering the company at Barron's shared their bearish opinions with the public. The analysts at Barron's think that the company is still overvalued despite being down nearly 50% since the IPO.

In the first day of IPO, the company's share price was as high as $42. Within the same day, the stock price fell to $38 and then all the way town to $17.7 where it found a short-term bottom. After rallying for a couple weeks, taking the price up to $23.3 per share, the company's stock price is down to $20.8 again. While there has been so much hype about the company's membership growth, there have also been worries about whether the company can actually monetize its huge database of members.

Barron's price target for the company is as low as $15 per share. This shouldn't surprise anyone given the company's revenue and profits. Furthermore, there is a huge uncertainty regarding the company's future as it attempts to find a way to monetize the members accessing the website through their mobile devices. The price target of $15 per share would give the company a forward price to earnings ratio of 24 and forward price to sales ratio of 6. Obviously, this valuation would still assume a lot of growth for Facebook, as a lot of technology companies trade for much lower multiples. For example, Apple (AAPL) looks at a forward price to earnings ratio of 13 and forward revenue to earnings ratio of 4.

Facebook's addition to Nasdaq's Q-50 index didn't help the matters either. Nasdaq's Q-50 index is the last step before a company is allowed to enter in Nasdaq 100 index. Of course, the companies in Q-50 are not guaranteed to make it to the Nasdaq 100 index and Q-50 index serves as a watch list for Nasdaq. Think of it like the NCAA league where players have to prove themselves to be drafted by the teams in the NBA league.

One of the analysts covering the stock, Jordan Rohan of Stifel Nicolaus & Co voiced his concerns regarding the company's short term prospects:

"We do not believe success in mobile for Facebook can come without some collateral damage in the near-term to the larger, more profitable desktop platform. We assume that revenue upside from mobile is a bit further off than Zuckerberg was signaling."

Facebook's mobile user base is growing while the company's computer user base is declining, which implies that many of the website's members don't use their computers to access the website once they realize that they can access the it through their mobile phones without being exposed to advertisements.

Moreover, Facebook is having trouble motivating its employees. The company's stock based compensation is as much as its monetary compensation. For example, last year, the company's stock compensation totaled $1.4 billion and this year it has already passed $1 billion. These compensation figures are left out of company's profit calculations, meaning that the company's profits are much smaller than what its earnings statements tell us. As the company's share price plunges rapidly, the employees that are compensated with stocks will sell their shares as fast as they can in order to capture as much cash as they can, and this will result in further damage in the share price of the company. Also, as the company's share price plunges, it will have to compensate its employees with more and more shares to make up for the decreased value in the company's stock price. As a result, the company might start losing key employees to competitors soon.

The analysts have a consensus price target of $30 on Facebook. I don't think this will become possible before the company is able to fit big-enough advertisements in tiny screens of mobile phones without making its users angry. Currently Facebook's investors are mostly tied to the company based on emotion. This is evident to see as the slightest bad news or negative comment about the company can cause a double-digit percent plunge in the stock's price. There is too much volatility and too little value in this stock at the moment.

If Facebook actually surprises all the analysts by finding an effective way of monetizing its mobile device users, the company will have a huge potential. If not, it can see single-digit share prices. The company is in such a shape that it will either do extremely good or extremely bad depending on how it monetizes the mobile platforms. I am not a fan of buying Facebook; however, those who want to buy some shares of the company should wait until the end of the lock-up period in December when most of the shares held by the insiders are likely to be dumped in the market. Once that happens, I might initiate a position in Facebook depending on whether the company has made a progress in monetizing its mobile device users by then. Until Facebook learns how to make money, there are much better options out there.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Just as the patent war was heating up, we have ourselves another war between Google (GOOG), Apple (AAPL) and the Nokia-Microsoft (NOK) (MSFT) coalition. Now, the issue focuses on the map applications. It all started when Apple replaced Google Maps application in the iPhone with its own mapping software after the release of iOS 6. Later on, Apple found out that its mapping software wasn't as impressive as the company hoped it was after receiving a lot of harsh criticism from the users. In addition, Nokia Maps found itself a place in the mapping wars when it was able to steal a bid from Ford (F) which Google was hoping to get.

As the hardware of smart phones start looking more and more alike, the consumers will have to rely on other things, such as the software and the operating systems to differentiate between smart phone brands while making a purchasing decision. Mapping is one of the few areas where a smart phone can differentiate itself from others. Nokia and Google have a lot of experience in mapping business whereas Apple doesn't. This picture was taken in the underground metro station in London and it mocks Apple's mapping attempt in a way.

Earlier on, Microsoft decided to replace its own production Bing Maps with Nokia Maps in all Windows Phone 8 products, including the tablets and smart phones that will be built by Nokia's competitors such as Samsung and HTC. Amazon joined Microsoft in implementing Nokia Maps in its new tablets. It looks like we will see more and more devices with Nokia Maps in the near future. One of the things that make Nokia Maps special is that Nokia Maps can work offline and it doesn't eat into the costly data plans unlike other mapping software for smart phones and tablets. Currently Google enjoys the largest market share in mapping software in mobile devices; however, Nokia is gaining market share rapidly.

Both Google and Nokia made announcements regarding Apple's mapping misfortune where each company mentioned their strengths in the area. Nokia's statement said it "truly understands that maps and location-based apps must be accurate, provide the best quality and be accessible basically anywhere. Unlike our competitors, which are financing their location assets with advertising or licensing mapping content from third parties, we completely own, build and distribute mapping content, platform and apps." Brian McClendon, vice president for engineering for maps at Google said: "it takes a long time and effort to figure out how to do this right."

In response, Apple has made the following comment: "We are excited to offer this service with innovative new features like Flyover and Siri integration, and free turn by turn navigation. We launched this new map service knowing that it is a major initiative and we are just getting started with it. We are continuously improving it, and as Maps is a cloud-based solution, the more people use it, the better it will get. We're also working with developers to integrate some of the amazing transit apps in the App Store into iOS Maps. We appreciate all of the customer feedback and are working hard to make the customer experience even better."

Apple's map comes with many problems that might take years to fix. For example, the map confuses one major airport with a farm. It is also said to give wrong directions and wrongly locate some of the major landmarks. In order to fix these mistakes, Apple decided to hire a bunch of people. Obviously, the company doesn't want to go back to Google Maps and help its biggest rival earn cash from its phones. Personally, I would be very happy to see an Apple-Nokia partnership where Nokia builds iPhone's maps. Furthermore, Apple could buy Nokia's entire mapping business with an amount that the company would consider "rounding error". Or they could simply buy Nokia, keep the patent portfolio and mapping business and spin off the rest of the company. Well, actually Nokia isn't for sale and Microsoft would step in immediately if Apple made an attempt to buy the company because Microsoft needs Nokia to see any growth in the smart phone market. But still, a Nokia-Apple partnership limited to mapping wouldn't hurt. If Apple could partner with Google all these years, it could partner with a much less hostile company (Nokia) way easier.

Because Nokia and Google have been working on mapping technology for a long time, the two companies are likely to hold many important patents in this area. When all the dust settles, if Apple's new mapping software is found to infringe any of these patents, this may take the patent wars to a new level. Apple will have to be very careful about what it does.

Google will lose some revenue because of Apple's move. The company makes 2% of all its revenues from iOS, but this is not limited to Google Maps as it also includes other Google applications such as the YouTube. Apple's iPhone has been one of the major sources of revenue for Google Maps. The company will have to push Android phones further if it wants to grow presence of Google Maps in the smart phone market. The company doesn't really specify how much money its mapping business makes, but it has to be high as the company enjoys dominance in the mapping segment. Besides, we all know that Google is big about cutting off projects that don't make money no matter how popular they are, and the company just keeps spending more money on Google Maps, which must prove that this is a very profitable business unit for the company.

I am long all four companies mentioned in this article. I like the growth rate, cash holdings and profit margins of both Google and Apple. I also like cheap valuations of Microsoft and Nokia. If I had to pick only one company, I would go with Apple. This is why Apple makes up the largest percentage of my portfolio. Nevertheless, I am long in all four companies as I believe that there is room for growth for all these countries. When one considers that there will be 1 to 2 billion additions to the smart phone market in the next decade, it is easy to see that there is room for everyone in the ever growing market.

Disclosure: I am long NOK, AAPL, MSFT, GOOG. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.