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Private European Investor and Fulltime trader. Legally trained with focus on commercial law. For my buy and sell decisions, I use Elliott Wave Principle. Fundamentals and education helps me to understand where we are today and where we are headed. Annual P / E ratio = future lies Fibbo, Gun,... More
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  • Nokia Short Of Supplie But Lumia 920 Is Left On The Shelf 9 comments
    Jan 3, 2013 11:10 AM | about stocks: NOK, AAPL, MSFT

    As a stock trader, I can only lament and say that Nokia (Nok) seems to have failed to take advantage of this year's biggest social gathering - Christmas

    In an interview last week, Nokia CEO Elop submitted that it was frustrating low supply of Lumia 920, that people got in touch and asked when they can get the yellow device.

    The market reacted positively to his first statements, and news circulated that there was great demand for the Nokia Lumia 920, but then the market has pulled its horses back.

    After last summer, studying his world-famous memo in light of what has happened since he wrote it 2 years ago - I can say that he has a belt in his statements that few people understand. For the same reason, I also see a great business leaders in Stephen Elop and this characteristic is that he says just the way it is, nothing more or nothing less.

    See the full interview here:

    http://tinyurl.com/cogmuut

    That is not a good sign either. But it is again what CEO Elop told us, frustrating low supply. I do see the same thing in other parts of the world.

    Low supply in Russia, Australia, but also in Europe where Microsoft staff recently refrained from their personal Lumia 920 to make those devices "end up at consumers'. A highly unusual action. Most Nordic operators have not received Lumia 920 at all before this years end. The few stores which have received them have sold very few phones. The Swedish operator Tele2 has sold out of all 1600 phones. But hey presto, 1600 smartphones does not even get you into the ring!

    Above ideas is also supported by Kantars recent survey of smartphone market shares. http://tinyurl.com/cob2qyn

    But what did CEO Elop actually say?

    1. Frustrating low supply

    2. People got in touch and asked when they can get their yellow Lumia 920

    3. Positive feedback from people taking their devices home

    4. Shareholders come out strong during the crises

    I will not argue about the last two points. The Lumia 920 is a great device, knowing by being one of them who actually bought it. And I do not pay attention to any CEO talking about the shareholders.

    But the first two points makes me worried.

    Let us start with a quick look back on the autumn. Lumia 920 was introduced on September 5 in New York.

    From the start, information that was coming was that it appeared that Nokia had difficulty producing enough phones to meet even the smallest quantities by their carrier partners.

    But the shares has been traded by the market in what I think is a hope that the phones were out due to high demand.

    More recently, there have also been reports that Nokia is only capable of producing 600 000 Lumia 920 per month in its Chinese factory. Which calculated from October it would mean that 1.8 million Lumia 920 was produced last three months of 2012.

    Everywhere in the world, Australia, China, Russia, Germany, the Nordic countries, the United States, there has really only been available data suggest a low supply of phones.

    We have to get this into line with the reality we have around us in the world. There is no reason to enter into denial. This is what CEO Elop told us, and who should know better then him?

    A natural thing to expect with high demand and frustrating low supply, of course is that the products are sold out in the shops and people standing in line to have their devices. But that is not the case 2012.

    At AT&T, they got the black and the white Lumia 920 in almost every store collecting dust. Red Lumia 920 is only available in a few stores, cyan, and yellow is out of stock, but it is not because it sold out to incoming phones. AT&T havn´t had the yellow one since the mid November.

    Again it just confirms what CEO Elop told us. Frustrating low supply led to AT&T never got the yellow Lumia 920 in stores again since its introduction and cyan they have only got just a few devices.

    But then Nokia must have sold them in China? China Mobile was broadcast as a big news since they made it before Apple, and the Lumia 920 was for a brief moment at the top of the best-selling phone on Amazon China. I even did wrote a short Instablog that it was number one for at least a second.

    But today it is not even on the list of top 100 (iPhone 5 is in position 89).

    Windows Phone still has much left to prove, consumers are showing no signs today of acceptance by the operating system. And how could they without devices in the stores with salespeople marketing the OS al around the world?

    In this industry, certain dates are especially important. Such is the new year when they most companies do annual accounts, as Nokia does. Nokia has recently brought in extra money by issuing convertible bonds and sale and leaseback the HQ. The money is not intended to end up in cash for the shareholders, the lion's share is intended to solve some loans on the balance sheet.

    But was it the first and last time Nokia raised money this century?

    CEO Elop also said even one other thing in the interview above.

    "There will be some tough times. That is for sure"

    Without phones in store, and those devices that are not selling, a CEO confirming both "frustrating short supplies and some tough times, for sure" one must act with care, particularly in a share that has risen so sharply last month on what I believe is hope for a high demand that might not be as high as the market today hope.

    Read the above Instablog in light of the fact that Samsung's S Ativ not existed for Christmas shopping what normally would increase the demand on competitors devices within the same operating system. But Nokia did not manage to get the phones to disappear from store shelves this year, even without the strongest competitor within the Windows Phones eco-system.

    Nokia is in its transformation process as we all know. But missed quarter sales in the exposed location can really be an unforgivable mistake. I would not buy the share at this moment before the report - Wait for the report, January 24 2013, that may contain unpleasant reality for Nokia shareholders.

    Disclosure: I am short NOK.

    Stocks: NOK, AAPL, MSFT
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Comments (9)
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  • Eld
    , contributor
    Comments (378) | Send Message
     
    Thanks FH for gathering interesting pieces of info here.

     

    Do you have any insight on why is there a low level of production?

     

    I mentioned earlier about QCOM's shortage of 28nm LTE chips, but not sure it is the only factor.
    6 Jan 2013, 08:29 AM Reply Like
  • Financehulligan
    , contributor
    Comments (1079) | Send Message
     
    Author’s reply » No. It will be interesting to see the report and how they explain it . Without phones in stores it can not have been possible to sell. You've probably been right all along. I hoped and believed, but runs now.

     

    HTC did not manage any well either. it is currently no evidence, statistics indicate greater success.

     

    What do you belive?

     

    Junk bond money does not fully cover debt exp. date feb 2014, not even with HQ and Rimm settlement. Do they have the time to turn cashflow around in time?
    7 Jan 2013, 11:12 AM Reply Like
  • doggiecool
    , contributor
    Comments (2797) | Send Message
     
    Puzzle me this. How can Lumia phones be in short supply AND collecting dust on the shelf?
    7 Jan 2013, 01:02 PM Reply Like
  • Financehulligan
    , contributor
    Comments (1079) | Send Message
     
    Author’s reply » Well, that is what I do not get, so I have to pass that one to CEO Elop and Nokia.

     

    Only reason I can come up with is very low demand, I would say frustrating low demand during the very important Christmas sales.
    7 Jan 2013, 01:16 PM Reply Like
  • doggiecool
    , contributor
    Comments (2797) | Send Message
     
    @author,
    I do agree with you that demand in the US is average. On the other hand, I still believe Nokia/AT&T has a supply issue going on in the US. Observable, via first hand knowledge.

     

    On the other hand, I believe demand for the 920 in Europe is above average. Demand in China and Asia markets is way above average. You state Christmas sales are critical for Nokia. I disagree, Chinese New Years sales are the most critical sales for Nokia. You will see 2-3X in Chinese consumer spending, than what you will see in US Christmas sales. Some of the 920 supply issues seen in the US, is do to Nokia's ramp up for the Chinese 920 (February Chinese New Year). Hopefully, on Jan 24th Nokia will give guidance to how Chinese sales are going, along with sales in India (starts Jan 10th).
    7 Jan 2013, 02:58 PM Reply Like
  • doggiecool
    , contributor
    Comments (2797) | Send Message
     
    Almost forgot.
    Nokia's NSN (4G LTE networking division) just announced another major contract with a Korean telco.
    Nokia's little NSN division is on track to earn over $1 BILLION in earnings for CY13 and revenues of over $16 BILLION. That's just from one little sub division. Astounding eh?
    7 Jan 2013, 01:05 PM Reply Like
  • doggiecool
    , contributor
    Comments (2797) | Send Message
     
    @author,
    Curious investors want to know more about Nokia's NSN division. Can you elaborate on all of their new 4G LTE contracts? How about NSN's multi billion dollar restructuring efforts coming to an end?
    thanks in advance!
    7 Jan 2013, 01:09 PM Reply Like
  • Financehulligan
    , contributor
    Comments (1079) | Send Message
     
    Author’s reply » What specific contract do you mean? Ordinary LTE contracts or any LTE Advance contract?

     

    That NSN restructing is doing good is no secret if you follow the Company.
    7 Jan 2013, 04:06 PM Reply Like
  • Charles Santerre
    , contributor
    Comments (1242) | Send Message
     
    You say "At AT&T, they got the black and the white Lumia 920 in almost every store collecting dust. Red Lumia 920 is only available in a few stores, cyan, and yellow is out of stock, but it is not because it sold out to incoming phones. AT&T havn´t had the yellow one since the mid November."

     

    What is your source? Did you call and or visit every AT&T store to gather this information? It would be nice to know.
    22 Jan 2013, 12:57 PM Reply Like
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