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Sami J. Karam

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  • A Microsoft Buyout Is Nokia's Only Chance For Survival [View article]
    "Nokia is nothing else than a pretty good engineering firm... Nokia is like the BMW of the smartphone space."

    When the industry shifts from "Who makes the coolest fastest phone?" to "Who can produce a great inexpensive AND profitable smartphone?", it will create an opening for a great engineering firm like Nokia to regain some share. We are moving in that direction with the Lumia 521 and future Asha phones. The main question is will this shift in the industry occur soon enough or will Nokia fade first?

    Apple can introduce a $99 phone but not without damaging its margins. No such 'problem' at Nokia.

    Also see:
    Jun 21 10:09 AM | 9 Likes Like |Link to Comment
  • Apple: The $200 Billion Question [View article]
    "Money doesn't just disappear, it simply changes hands. When you go out to eat you spend money, meaning you have less, but also meaning the restaurant has more. The same principle is true with money invested in stock."

    That's not really correct. Money can disappear in the stock market. If there is bad news overnight and the US market opens down 2%, the billions of dollars represented by that 2% have disappeared. They haven't gone to someone else. Same with individual stocks. Market cap declines don't happen only as a result of people selling securities. They also happen from gap downs without anyone doing a sale. If a company with a $100 stock comes out with a bad report, the next bid may be at $75 even if no one has transacted between 100 and 75.

    The same is true on the flip side. Good news may result in a gain in value for shareholders without a corresponding loss of value elsewhere.
    Feb 11 10:49 AM | 6 Likes Like |Link to Comment
  • Coach: A Long-Term Investment Opportunity In A Good-Yielding Stock [View article]
    When a stock valuation is this out of line with profitability, it can only mean one of two things: either the stock is too cheap, or margins are about to come down. Given that Coach is now discounting in "full-priced" stores (see this:, the second is now a clear possibility. Could be a bad quarter.
    Jun 11 01:29 PM | 3 Likes Like |Link to Comment
  • New Home Construction Ramping In The Chicago Metro Area - 2014 [View article]
    "55,000 more people work in the Chicago MSA than one year ago, and (yet) cities issued only 9,000 total permits during that time (Population estimated at 9.2 ML for 14 counties)"

    The table in the link below shows the number of employed slightly down (not up) from Dec 2012 to Dec 2013. There was a dip in employment last winter, and this winter may show an increase as a result, but that's not a conclusive trend until the number gets comfortably over 3.8 million. Am I missing something else?
    Feb 6 12:31 PM | 3 Likes Like |Link to Comment
  • Microsoft's Interest In Nokia Is Fantastic News [View article]
    The SOTP approach to valuation is useful, in particular if you run various scenarios on the divisions which are hard to value. The reality is D&S is not really worth 0.33x current sales. It is either worth zero or at least 1x a higher future sales number. NSN at 0.8x sales is a bit aggressive for a low scenario, so say 0.5x. HERE faces a lot of competition but $1B is not a huge stretch. And cash doesn't usually 'trade' at its nominal value but at a discount to that value, say 50%. In a distress scenario, you could argue the cash is worth zero since they will burn through it quickly.

    So if I go by your number for Patents, the total can be as low as $18 billion or as high as $50+ billion. In either case, NOK looks undervalued, unless the value of the Patents is overestimated.
    Jun 20 06:54 AM | 3 Likes Like |Link to Comment
  • Nokia Finds Itself A Real Contender Once Again [View article]
    Re a Microsoft buyout, it doesn't have to be a full takeover. A 50/50 joint venture, say for next generation phones and tablets, or a 20% investment by Microsoft in NOK would help both firms.
    Jun 12 01:01 PM | 3 Likes Like |Link to Comment
  • America: Heading Towards Zero Population Growth? [View article]
    “The productive members of our society have been experiencing a negative growth here and in Europe, and the dependent and poor account for the the increases.”

    I agree. I tried to address this issue a few years in this other SA post.
    Apr 9 07:59 AM | 3 Likes Like |Link to Comment
  • Death Of The Gold Bull Market? [View article]
    Thanks for this overview. In my views, the two main drivers for gold have been 1) deteriorating demographics which you allude to with your comment on retiring baby boomers. And 2) skepticism in governments' ability to tackle rising debt levels, now from the financial crisis here and in Europe, and in the future from rising demand from entitlement beneficiaries.

    Demographics can't be fixed quickly and will continue to be a problem, although less so in the US than in Europe. But any sign that governments are addressing the debt problem constructively will remove one of the supports for gold.
    Mar 27 11:54 AM | 3 Likes Like |Link to Comment
  • Apple Market Share: Slip, Slipping Away [View article]
    Product pricing remains robust but prices are set to defend margins, not necessarily to give the buyer what he wants. You end up buying more than you need. For example, there is no 32GB iPad (at $499?) and you have to buy the 32GB iPad Air for $599. The Air is sleeker, lighter by 0.44 pounds and has a better chip, but you don't have the option of not paying for these extras. Similarly the pricing difference of the iPhone 5c vs. 5s is not large enough, esp when spread on a 2-year contract.

    It is a great pricing strategy while it lasts but it may be vulnerable to competition that hits more price points. At some point, the utility of a better iPhone or better iPad levels off and people just want a better price.
    Jun 23 12:03 PM | 2 Likes Like |Link to Comment
  • Emerging Market Misery And U.S. Large-Cap Euphoria [View article]
    The problem with a bull case based on echo boomer demographics is that, unlike in the 1980s and 1990s when the 1945-1964 boomers came of age, we now have growing numbers of those original boomers entering retirement and then passing. This means two things: 1) The US dependency ratio is rising for the first time in decades, and 2) the overall US population will be growing at progressively lower rates for the next 30 years.
    Feb 6 01:21 PM | 2 Likes Like |Link to Comment
  • Gold Long-Term: Nowhere To Go But Down [View article]
    "Use in manufacturing has largely ceased for gold, and in particular due to cost more so than utility."

    In Q1-Q3 2013, gold demand for technology products amounted to 309 tonnes. That is roughly the same run rate as in the last ten years.
    Nov 23 03:56 PM | 2 Likes Like |Link to Comment
  • Revisiting PotashCorp Following Its Deal With Sinofert [View article]
    Seems like a lot of companies are building capacity. What will that do to pricing?
    Jan 11 11:07 AM | 2 Likes Like |Link to Comment
  • Quick Consequences From Obama's Freeing Of Crude Exports [View article]
    Since yesterday's news the spread between WTI and Brent has not narrowed much. It has averaged $7 ytd and it is now $7.20. This suggests that the crude market does not believe (yet) in a wholesale lifting of the ban.
    Jun 25 09:15 AM | 1 Like Like |Link to Comment
  • It Is Still Not A Good Time To Buy Coach [View article]
    Stan, a good overview of the risks. Management continues to ignore the elephant in the room: the large number of factory outlets which are selling low priced items and damaging the brand.
    Jun 24 08:26 AM | 1 Like Like |Link to Comment
  • Maybe I'm Wrong - Justifying $2,000+ Gold [View article]
    Inflation drives the price of gold but it is not the only driver. There have been many many successive years when gold was rising while inflation remained low. So clearly, there is something else at play.
    Jun 3 06:06 AM | 1 Like Like |Link to Comment