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  • Why Nokia's (NOK) Phone Division Is At Risk 75 comments
    Dec 4, 2012 9:46 AM | about stocks: NOK

    Why Nokia's (NYSE:NOK) phone division is at risk

    Nokia has been recently the focus of attention for many investors. First, because it released a competitive product, the Lumia 920, in the smartphone business, vs. Android/iOS devices. Second because the share price, after riding to the bottom until end of July, has found a second life since, increasing 100% since its lowest point in July. Third because the first shipments of his new flagship, Lumia 920, have sold out in many countries, and the Asha Full Touch line has been warmly welcomed in developing economies (6.5m volume in Q3).

    Some analysts have upgraded their recommendation and targets for the share, mostly Scandinavian ones: Nordea (strong buy, 19.10), Danske (buy, 23.11), Pohjola Market (buy, 15.10). However, we can notice that their target remains in the range EUR 2.9-3.1, which is a modest 14-20% premium vs. current price. Is NOK long-term value so close to the current trading price?

    Part of the answer lies in the risks inherent to NOK's phone business. Nokia is at risk. Here are the main reasons why.

    1. The cost-structure of the company in the smartphone business is not sustainable and cannot generate positive cash flow.

     

    Q1 - 2011

    Q2 - 2011

    Q3 - 2011

    Q4 - 2011

    Q1 - 2012

    Q2 - 2012

    Q3 - 2012

    Sales (EUR m)

    3528

    2351

    2194

    2747

    1704

    1541

    976

    Volume shipped (million)

    24.2

    16.7

    16.8

    19.6

    11.9

    10.2

    6.3

    COGS/Sales

    -71%

    -77%

    -79%

    -80%

    -84%

    -98%

    -104%

    OpEx/Sales

    -24%

    -32%

    -30%

    -27%

    -33%

    -35%

    -45%

    Operating margin/Sales

    5%

    -9%

    -9%

    -7%

    -17%

    -33%

    -49%

    Lay-offs D&S (*)

    1540

    1000

    1300

    5500

    2600

    3500

    5000

    Source: NOK quarterly reports
    (*) D&S = Devices & Services, all phone division (smart+feature phones)

    NOK's volume faced a continuous drop since Q1 2011 (last quarter when the smartphone division was profitable). Nokia is a big ship, a phone-maker that used to make 25-30m smartphones per quarter in 2010, and suffered a drop by 50% of its volume within 1 year (Q1 2011/Q1 2012), and by 66% within 3 quarters (Q4 2011/Q3 2012). It is impossible to adjust quickly the production capacity to such a drop, because we are talking of an initial output of 25 million smartphones (Q1 2011).

    As you can notice in the table above, NOK tried to anticipate in Q4 2011 to re-calibrate the workforce, to decrease OpEx, and COGS. But the landing point was overestimated, resulting in more and more lay-offs in 2012.

    If we assume COGS/Sales is assumed to be ideally a constant ratio, NOK is far from that, and is not really taking actions to decrease this, as you can see in 2012 (84%->98%->104%).

    As for OpEx, which are marketing and R&D expenses, Nokia is doing a better job here, but the level is not sustainable in the long-run. Which company can be profitable with spending 33-35% of the price in R&D and marketing, when it already "eat" 80-90% of the price in making the product?

    2. The feature phone market is rapidly decreasing and will soon not contribute anymore to the operating margin.

    Feature phone market turned according to Gartner from 325m shipped units in Q3 2011 to 259m in Q3 2012.

    All in all, this is a drop of 20% year-to-year that can be expected in 2012 vs. 2011.

    At the same time, NOK's operating profit for featured phones dropped from an average of EUR 350m in 2011 to EUR 100m in 2012. How sustainable is that?

    3. More lay-offs might be coming, implying more expenses.

    NOK announced 10,000 layoffs in D&S in June 2012. NOK already laid off 5,000 employees in Q3 2012 in D&S, which is half of the target, and clearly - the situation has not improved (operating margin at -49%). There are still 38,000 employees in the D&S business, resulting in sales of EUR 3.3bn in Q3, while AAPL generates $30bn with 30,000 employees (not only smartphones, though, but it gives some kind of a comparison in the industry).

    NOK is likely to lay off more people in early 2013, resulting in more cash burn.

    Conclusion

    NOK's phone business is clearly at risk, because the company is still moving from an established maker of quarterly 25-30m smartphones to a challenger, ramping volume up from 1m Lumias in Q4 2011. The faster-than-expected decline of Symbian models plays an important role in this, as quoted in Q4 2011 report by NOK's management: "Following the announcement of our strategic partnership with Microsoft in February 2011, our strategy included the expectation to sell approximately 150 million more Symbian devices in the years to come. However, changing market conditions are putting increased pressure on Symbian (…) We now believe that we will sell fewer Symbian devices than we previously anticipated".

    These factors are internal, not external, since it is about adapting your production capacity to the demand. To cope with these challenges, NOK would need to take significant measures to "clean" the company, by shutting down factories to decrease costs.

    In this situation, NOK's phone division cannot even be a target for a buyer, who wants to inherit such a cost structure?

    Stocks: NOK
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Comments (75)
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  • Seppo Sahrakorpi
    , contributor
    Comments (1871) | Send Message
     
    Thanks, a good summary of your analysis and points you have been making.
    4 Dec 2012, 12:27 PM Reply Like
  • turtledividend
    , contributor
    Comments (281) | Send Message
     
    Thank you as well Eldaheal.. NOK will still be leaders of feature phones. I believed the transitions they are going through has affected the manufacturing constraints. NEW lines of Asha was also re-introduced and the Lumia line is still fairly new. Great points though. NOKIA is a very very big ship, to change course will take time.
    4 Dec 2012, 04:20 PM Reply Like
  • Eld
    , contributor
    Comments (378) | Send Message
     
    Author’s reply » NOK holds 30% (and growing) market share in feature phones. The key point will be the 'landing point' of the market in Q1 2013, because the factories for featured phones are now designed for 400m phones per year.

     

    NOK will ship around 300m phones this year, and the production for 2013 might be around 250m.
    6 Dec 2012, 08:57 AM Reply Like
  • turtledividend
    , contributor
    Comments (281) | Send Message
     
    Elop is concentrating on Asha and Lumia lines. These are the game changer for the company. Keeping it simple and clutter free. Lower over head cost and aggressive pricing to capture market share. Eld, you may be right about Nokia losing ground, but I believe this will be the turnaround story of the hardware tech industry.
    6 Dec 2012, 12:34 PM Reply Like
  • Eld
    , contributor
    Comments (378) | Send Message
     
    Author’s reply » I do believe in NOK's turnaround, but it'll take more value destruction than the current situation :-)

     

    In other words, NOK'll see the brightness in Q3-Q4 2013, not before, according to me.

     

    As I said before many times, until Q1 2013 results, you are pretty safe and should enjoy the ride up!
    6 Dec 2012, 01:42 PM Reply Like
  • Davidoff
    , contributor
    Comments (287) | Send Message
     
    Eld,

     

    Excellent article! The thing is, Nokia has too many different phones in production to fit to the customer's preferences in different parts of the globe. They still sell phones with numeric keyboards and even though they see a huge success in emerging markets, Nokia barely earns money on selling them. To increase their margins, they will not only have to fire a lot of worker, but they will also have to make a lot of adjustments in their product lines. It will take a lot of time, but I think that they will be able to make it by the end of 2013. It will also depend of their new releases and of the demand for Lumias, how will it evolve in time. Nevertheless Nokia doesn't start out of scratch and it's much easier to adjust production in existing facilities rather than to build new ones.

     

    Regarding the share price, NOK is traded extremely low so investor's expectations are not as delusional as those, that Apple is facing right now. So I suppose that even if they will burn some cash, as long as the sales are correct or even maybe exceeding the expectations, NOK won't face this summer's lows anymore. So I don't think that I'll make any moves with NOK before seeing what the company becomes in 2014. The positive side is that psychologically people invest much easier in cheap stocks rather than in whales like AAPL, IBM or AMZN. They get their cash easier out of pocket and hope for a miracle, so NOK can soar very fast if many longs notice that the company is outperforming and jump in.

     

    If you regard the stock from the perspective of the demand, it has a huge upside potential, even though the company is suffering and th management didn't get any better.
    19 Dec 2012, 07:59 AM Reply Like
  • Eld
    , contributor
    Comments (378) | Send Message
     
    Author’s reply » I agree on the first part of your statement Davidoff.

     

    I think situation will be clearer end of 2013 for NOK, but there is downside potential until then.

     

    "Nevertheless Nokia doesn't start out of scratch and it's much easier to adjust production in existing facilities rather than to build new ones"
    => it depends on your fixed costs of your existing production park. This needs further detailed research. Plant fixed costs can kill a company if demand drops significantly and assets are not sold soon enough, there are many bankrupcy stories "only" based on that. Forecasting correctly the demand and adjusting production park is the management's first task.
    6 Jan 2013, 08:47 AM Reply Like
  • Davidoff
    , contributor
    Comments (287) | Send Message
     
    Eld,

     

    I disagree with you completely. Fixed costs is something that the company has already paid for, it's the unadaptable part of the production line. Fixed costs is plants, offices, headquarters, production machines. It's something that the company owns and on the long term it isn't even taken in account economically because the variable costs overcast them completely. So its quiet the opposite, when a comany is going through a turnaround, they adapt their variable costs in order to achieve a better profitability! They layoff working force, they adjust their input and try to find a way to use it more efficiently, they adjust working hours, output and so on and on and on... All that is part of variable costs, while fixed costs only concern companies that enter the market! And once again:

     

    "Forecasting correctly the demand and adjusting production park is the management's first task."

     

    Concerns only variable costs, cause fixed costs can't be adapted at all. Take your old economics syllabi back!

     

    There are engineers in management who work as consultants and who help companies to adjust their production line and increase the production efficiency, reduce the bureaucracy, layoff the unnecessary working force or intermediary chiefs, and so on... I'm sure that Nokia already hired hundreds of them and they already have decades of experience in adjusting their production lines.
    7 Jan 2013, 07:18 AM Reply Like
  • Eld
    , contributor
    Comments (378) | Send Message
     
    Author’s reply » @ Davidoff-

     

    "Take your old economics syllabi back!"
    I think this is you who should revise your economics :) Fixed costs are ongoing costs not dependent on sales (to simplify). For plants, it is not negligible, and I recommend you do the math for NOK, because you will see how much it is.

     

    "fixed costs can't be adapted at all"
    Wrong. When you shut down a factory, you do adapt fixed costs. By not shutting and lowering production level, you accept to lose money by expecting brighter future.

     

    As regards NOK's management forecasting skills, there is an interesting piece of info in a message I wrote below on this instablog. You will see there pieces of evidence making the case for my point.

     

    The only point you're really mentioning here is NOK's experience. I can not disagree (because this is fact), however let me point out that NOK used to be a phone AND ecosystem maker, and is turning into a pure manufacturer for its phone division. The rules of the industry have changed. NOK does not make the market anymore.
    7 Jan 2013, 09:21 AM Reply Like
  • Davidoff
    , contributor
    Comments (287) | Send Message
     
    I went too far by saying that fixed costs can't be adjusted at all. They can on a very long term, but it's very rare. For example when a company closes its plant, they do it in order to drastically reduce their variable costs, to reduce the working force, to reduce the input and everything else related to the production. They try to fit to the demand they are facing. They reduce their total costs by sparing money on their forecasted eventual variable costs. But companies rarely "sell" their factories, they just close them, so they don't get their fixed costs back, that's why they are also called "sunk costs". Fixed costs represent a way too little part of total costs in order to adjust them. They only concern companies that enter on the market and that didn't start this production yet. They enter the market, they need to build or purchase facilities and so their fixed costs represent the biggest part of their total costs. What is important for companies on the long term, are average total costs, cause that's what determine their profits. And average total costs are by ~95% dependent of the variable costs.

     

    However I don't know what did you study in college, economics or accountability. I can assume that in accountability, fixed costs and variable costs have a marginally different meaning.
    7 Jan 2013, 09:37 AM Reply Like
  • Eld
    , contributor
    Comments (378) | Send Message
     
    Author’s reply » What you are saying Davidoff, is that in your opinion NOK's plants do not consume much fixed costs, since in your opinion 95% of costs are variable.

     

    Then, how do you explain that the ratio COGS/sales is not a constant? Because if we follow your point, it should be constant, due to a majority of variable costs, am I wrong?
    7 Jan 2013, 09:41 AM Reply Like
  • Davidoff
    , contributor
    Comments (287) | Send Message
     
    Eld,

     

    There is nothing wrong in abandoning the ecosystem. There are plenty of them on the market and Android, iOS, BB and WP are just the most famous of them. A company doesn't need to own an ecosystem in order to make the market. I think that the decision of abandoning Symbian only reflects they fact that Nokia is considering to sell its phone division to Microsoft in the near future. Lumia series looks to me like a test for a possible future acquisition. Nokia has been making phones for only 30 years, while its a company that existed for ceveral centuries. They surf on the market, they invest in R&D, they invest in mapping industry and in telecommunication technology. Phone division is more like the weakest link with the lower that average margins at this point. Nevertheless, many companies would like to own this link, cause once again, it's much harder to start out of scratch, rather to own an existing business network. You can't be too sentimental about a business you just need to find a way to earn cash and I suppose that Nokia is very fit to do so.
    7 Jan 2013, 09:46 AM Reply Like
  • Davidoff
    , contributor
    Comments (287) | Send Message
     
    Eld,

     

    Once again, are we talking economy or accountability? Define variable costs. You're mixing everything. If you take a plant, the plant by itself and the machines that it owns is considered as being fixed cost. The number of workers, their salary, social security, their working hours is considered as being variable cost. The input, all the primary material, everything that is used in order to manufacture a product is variable cost. The transport, the taxes... All of that is part of the manufacture but it's considered as being variable cost in economy.

     

    I don't know what are the economical fixed costs at Nokia. 95% is the average for a tech company. However, the fixed costs are barely taken in account in economy on the long term. They are almost inexistent in case of companies like Nokia, we only study marginal costs and average total costs in order to find the most efficient way of working. Marginal costs don't even include fixed costs! That's the base of the industrial economy (first year of college). Either you didn't study economy, either we speak different languages (economical and accountant).
    7 Jan 2013, 09:57 AM Reply Like
  • Eld
    , contributor
    Comments (378) | Send Message
     
    Author’s reply » "Define variable costs. "

     

    A variable cost is a % of sales, that is not assumed to vary much from quarter to quarter. Example: flexible labour cost for manufacturing. The % of a variable cost change if the company improve something in its manufacturing, supply, etc...

     

    A fixed cost is a fixed amount per quarter, independent on sales. Ex: maintenance of plants, part of electricity supply, tax on plant land owned, etc...

     

    Given the fact costs are valued at market value in the financials, I think the analysis of the P&L is relevant for valuation purposes.
    7 Jan 2013, 11:42 AM Reply Like
  • Davidoff
    , contributor
    Comments (287) | Send Message
     
    Eld,

     

    I don't know where that definition comes from. It's not accountability, nor finances, nor economy... I'm not saying that it's wrong, but it's not the "official" definition. First of all, when you produce something, you aren't necessary going to sell it, so the % of sales has absolutely nothing to do in a definition of costs. It's only relevant when you study the profit, the margins and so on. Costs only regard spendings in order to produce a product. Secondly, the variable costs do vary on the middle term, that's why they are called variable. Depends of the company's ability to adjust its production line. The company is forecasting a demand, that it is going to face in the near future, so they try to fit to that demand and so they adapt their production. By doing so, they might spend more or less for the manufacture. It's all part of corporate strategy and their ability to forecast the future demand.

     

    Here's a link to the economical definition and a basic explanation : http://bit.ly/TGOIhM
    http://bit.ly/UDkMSG

     

    I'm very curious to know where did you find that definition. I simply have no idea where it comes from and what it actually defines...
    7 Jan 2013, 12:25 PM Reply Like
  • Eld
    , contributor
    Comments (378) | Send Message
     
    Author’s reply » My point here is not to enter an accounting debate, but to highlight the fact that costs not related to production (e.g. fixed costs) are not sustainable for NOK.
    7 Jan 2013, 12:41 PM Reply Like
  • Davidoff
    , contributor
    Comments (287) | Send Message
     
    Eld,

     

    To be honest, I'm really dissapointed... What else can I say. You can't follow a simple conversation. We were talking about margins. What costs not related to production are not sustainable for Nokia and what do they have to do with Nokia's phone margins? They sold a huge part of their real estate assets, what else to you want them to sell? Their Chines plants? Or maybe the whole business in order to reduce their "fixed costs"? Selling their assets is not what is going to increase their margins or reduce their costs. It's just one time sales that are going to raise some cash flow but it will certainly not make their financial situation any better. As any other company in trouble, what they need is a deep restructure of their phone business, plant by plant, office by office, phone model by phone model. And in order to do so, they need to hire dozens if not hundreds of consultants specialized in management, manufacture, technology, accountability and economy. And that's what they have been doing since Q4 2010 and it will last at least till Q3 2013. While you were learning what variable costs and what fixed costs are, they've been working on a new strategy. And unfortunately for them, it takes years of research to figure out what might be th best strategy to adopt for a company like Nokia.

     

    Could you please be kind enough to share with me what kind of degree do you have and where did you study? I'm getting really curious at this point.
    7 Jan 2013, 01:09 PM Reply Like
  • Eld
    , contributor
    Comments (378) | Send Message
     
    Author’s reply » @ Davidoff:

     

    NOK has many factories that are running on low-production levels. I think this is a pretty good example of not-sustainable fixed costs :-)

     

    "What costs not related to production are not sustainable for Nokia and what do they have to do with Nokia's phone margins?"
    => These fixed costs are, as mentioned many times before, all costs not related to production: permanent wages, some energy supply, taxes on land, etc... related to each factory whose production is far from its nominal output.
    => They are in COGS and OpEx in the financials, so they do impact phone margins.

     

    I have 2 questions for you, since you seem to have so great knowledge about these topics:
    - How do you explain that the ratio COGS/Sales varies significantly quarter-to-quarter from 77-80% to 84%, 98%, 104% if not by fixed costs?
    - How many factories do AAPL own?
    7 Jan 2013, 02:33 PM Reply Like
  • Davidoff
    , contributor
    Comments (287) | Send Message
     
    Eld,

     

    It's an extremely breed vision of the industry... Comparing Apple with Nokia makes no sense. They choose two completely different business models mainly because Nokia has been in phone business much longer than Apple and so Nokia uses an older business model. In management 10 years is comparable to a century.

     

    It's a huge back pain to close factories and companies are extremely reluctant to do so, because they always hope that tomorrow might be better and the demand my surge. It takes much less time (a question of weeks, maybe months) to readjust the production in a factory, rather than to build a new one, which takes years. The other problem is to layoff workers which might be very costly and the social responsibility is simply huge. Companies closing their factories take a giant hit on their national image. Companies that sell high scale products directly to the population, under their own brand, close their factories only when they don't have other choice. The other issue is that when a company shuts its factory down they keep it unused. Selling it would only bring about 10% of its initial cost. And by experience, I can tell that a factory that has been shut down for just 5 years needs a lot of work and money to be operational again.

     

    Apple choose a modern business model, they sign contracts with intermediary firms that manufacture their goods. It has its positive points, but a lot of negative points too. They highly depend of their Chinese counterparts who feel that they are in power, since if they decide to break the contract, Apple will be in much worse position than them. So even though Apple is one of their biggest clients, they control Apple. The other issue is that Apple can't control what's happening in Chinese factories and they can't influence the working conditions. There is a huge marketing campaign worldwide asking to boycott Apple products because of the "situation" in Foxconn plants. And of course there is a huge lack of security on Foxconn plants and that's why we see next Apple products over 6 months before the official release. Now I read many articles saying that Apple wants to use its tremendous cash flow to open its own factories in years to come, simply because they see the limits of their business strategy.

     

    Why does the ratio COGS/Sales varies? Certainly not because of the fixed costs. As I said before they take an insignificant part of the whole production cost. First of all, it's a rate so it's supposed to vary a lot in time. If the sales increase the rate goes down, if the sales decrease the rate goes up with the exact same costs. Nothing complicated, just math basics. The other part is the costs and it's very complicated to speculate on them. There are hundreds of factors that influence costs and I don't know why do you stick to the fixed costs so much, but it's the smallest part of every company's total costs. Once again, they only have sense in case of a company that plans to enter a market.

     

    I can easily imagine that you've never studied economy before and it's really amazing how you stick to the COGS/Sales rate and fixed costs.
    It's like if you were using some basis one variable math equations to analyze the speed of molecules...
    7 Jan 2013, 03:39 PM Reply Like
  • solucky
    , contributor
    Comments (6642) | Send Message
     
    Its definetely wrong that Apple cant change the situation at Foxconn, it is like in most other companys profit is greater than ethic :(.
    7 Jan 2013, 03:45 PM Reply Like
  • Eld
    , contributor
    Comments (378) | Send Message
     
    Author’s reply » "I can easily imagine that you've never studied economy before and it's really amazing how you stick to the COGS/Sales rate and fixed costs."

     

    I'm gonna help you, because you have issues to understand basics of cost analysis, and why it is important:

     

    COGS = Fixed costs (1) + Variable costs (2)

     

    (1) = relatively constant, varying mainly with size of production park. You assume it is negligible, I disagree (analysis of NOK financials show the contrary).
    (2) = % of output, varying with manufacturing/supplyin... technologies/structures used. This is the part you think it is "very complicated to speculate on them". It depends for whom :-)

     

    By decomposing the COGS, it is possible to:
    - determine the breakeven in volume of sales
    - determine the efficiency in the phone business of NOK vs. competitors

     

    Of course it requires a bit more than financial analysis :)
    7 Jan 2013, 03:55 PM Reply Like
  • Davidoff
    , contributor
    Comments (287) | Send Message
     
    Eld,

     

    Please, stop making em laugh it's getting ridiculous. COGC is called total costs. Now I'm going to try to explain you your own definition, cause you clearly don't understand it.

     

    Fixed costs = relatively constant, varying mainly with size of production park.

     

    It means that if a company builds a new facility, a new office, a new factory the FC goes up. You do it in order to increase the production capacity. Did you hear that Nokia was planning to open a new factory? Their costs can only go down at this point. For an average company FC don't vary in years.

     

    Variable costs = % of output, varying with manufacturing/supplyin... technologies/structures used.

     

    It simply the amount of additional fees that you need to spend in order to produce x phones. Unlike for FC, you can chose how much you want to manufacture and you can forecast how much it's going to cost you. It doesn't vary a lot in time, because companies need a lot of time to be able to adjust their production and so to increase or decrease their VC. If you want to produce 100 phones you need y workers and z inputs, if you want to produce 200 phones you need 3y workers and 3z inputs.

     

    The thing is, when you produce, say 1 billion phones a month, it costs you 30 billions a month and 360 billion a year. Compared with some 100 billions that you spend on your facilities 10 years ago, it doesn't represent a thing on the long term. The more you produce, the less your FC become relevant.

     

    By decomposing the COGS, it is possible to:
    - determine the breakeven in volume of sales
    - determine the efficiency in the phone business of NOK vs. competitors

     

    Thank you for that incredible definition, didn't think about it that way... Once again, you asked me why this rate varies so much from quarter to quarter. I explained you that companies like Nokia need at least a year to adjust their costs. It can take a year to adjust the VC a little bit and it can take over 5 years to adjust the FC. So the total costs change very rarely. What actually does change in the COGS/Sales rate are exclusively the sales, from one quarter to another. Once again, with the same costs, if the sales goes up, the rate decreases, if the sales go down the rate increases. It's a simple matter of profitability and there is nothing "magic" about it. You see how much Nokia needs to sell phones in order to get its spendings back and as you said you can compare Nokia to other companies exclusively by its sales and costs. It represents a "base" of discussions to figure out what the company needs to adjust in order to increase its profitability.

     

    It's easy so say that a company needs to decrease its VC and put a number on it, but you can only argue about what you need to do in order to adjust the VC, cause the VC is an addition of hundreds of different fees. Each of then can be adjust in thousands of ways and you spend years to study the whole production process and to figure out where every fee comes from and what you need to do in order to adjust it. Don't even dare to claim, especially in wake of our discussion, that you are able to study Nokia's COGS during your free time and with the figures available on the Net. You need years of practice and multiple degrees in order to execute that job.
    7 Jan 2013, 04:26 PM Reply Like
  • Eld
    , contributor
    Comments (378) | Send Message
     
    Author’s reply » "Did you hear that Nokia was planning to open a new factory? Their costs can only go down at this point."
    => So when you open a new factory, your fixed costs automatically go down? Nice thought... not sure it is the reality of business life! For sure when you open a factory, your fixed costs automatically go up, and they are compensated by the ramp up in volume (covering FC and VC) output at this new plant, this is very very basic...

     

    "The thing is, when you produce, say 1 billion phones a month, it costs you 30 billions a month and 360 billion a year. Compared with some 100 billions that you spend on your facilities 10 years ago, it doesn't represent a thing on the long term."
    => Your are mistaking everything here. Fixed costs are not cash outflows related to production park you paid "10 years ago", they are recurrent costs with amount independent of the output level. As regards the estimations you're giving above, they do not make sense since they are not relevant in the industry and pure imagination of yours (which makes it easier to support your point).

     

    "It can take a year to adjust the VC a little bit and it can take over 5 years to adjust the FC. So the total costs change very rarely."
    => Completely wrong statement seriously... Take just NOK, check COGS, relate it to the changes of structure (e.g. closing of plants, lay-offs, etc...), and you'll see that total cost (e.g. % of output for VC, total costs for FC) do vary independently from sales! Maybe you're not able to do this, which could explain your kind words at the end of your message :)
    8 Jan 2013, 02:21 AM Reply Like
  • Davidoff
    , contributor
    Comments (287) | Send Message
     
    Eld,

     

    It's going nowhere. You refute microenomical basis, things don't even need to be proved. These are commonly admitted facts and since you disagree with them leaves me no doubt that you've never studied economy and I'm just wasting my time talking to you. I'm not a teacher and it's hard for me to explain you such a basic things especially in English. I'll use the most simplistic economic formulas, maybe you will understand better...

     

    Take a simple total costs function : TC = aq^2 + bq + c
    In this function variable costs are represented by (aq^2 + bq) and fixed costs are represent by c because fixed costs is a constant, they don't evolve with production.
    So here you can see that the more the production (output), represented by q rises, the less fixed costs take a dominant place in the total costs. On the long term they become completely irrelevant. It's a commonly admitted fact in the classic and modern economy.

     

    Now why Nokia's COGS varied so much in the last quarters? Simply because they go through a long turnaround, that they've been planning for years. That's why there was a spike of costs, that are not related to the production. A normal average company sees its COGS varied strictly because of the VC. Normally they just increase of decrease their output and so they spend more or they spend less in order to produce.

     

    If you want to show yourself even more stupid than you actually are, please be my guest and refute these simple facts. Next thing you'll know, you're going to scream that the Earth is a cube.

     

    Seriously I'm really curious to know what did you study n in which college! I can hardly imagine that you went that far, but who knows.
    8 Jan 2013, 07:16 AM Reply Like
  • Davidoff
    , contributor
    Comments (287) | Send Message
     
    "Maybe you're not able to do this, which could explain your kind words at the end of your message"

     

    It seems that you didn't even get the sense of my last sentence. You can find the COGS of any company on the Internet. But it's just a number without any importance. What is important is to be able to analyse the whole costs and to be able to influence it in order to reduce it. COGS/sales is simply an informative rate that gives you an extremly restricted information. You can't analyse the company's structure, what it needs to improve and how it needs to do it without much more specific and detailed numbers. Even if you have the exact VC and FC you are still nowhere in your analysis. I'm really sorry that you don't even understand that, but somehow it doesn't even suprise me...
    8 Jan 2013, 07:24 AM Reply Like
  • Eld
    , contributor
    Comments (378) | Send Message
     
    Author’s reply » "Take a simple total costs function : TC = aq^2 + bq + c
    In this function variable costs are represented by (aq^2 + bq) and fixed costs are represent by c because fixed costs is a constant, they don't evolve with production.
    So here you can see that the more the production (output), represented by q rises, the less fixed costs take a dominant place in the total costs. On the long term they become completely irrelevant. It's a commonly admitted fact in the classic and modern economy."

     

    You're saying c (=fixed costs) are negligible in the long run *if* the output rises enough (I do agree).

     

    But you forgot that NOK is running on low volume vs. production capacity (i.e. q is small), so your constant "c" is not negligible anymore at current output levels!

     

    You just proved my earlier point, thanks :)

     

    "Now why Nokia's COGS varied so much in the last quarters? Simply because they go through a long turnaround, that they've been planning for years. That's why there was a spike of costs, that are not related to the production."
    => Could you please explain more precisely? What (not related to production) in the turnaround makes the COGS volatile?
    8 Jan 2013, 07:27 AM Reply Like
  • Davidoff
    , contributor
    Comments (287) | Send Message
     
    Eld,

     

    Please, be kind enough to answer my question and expose your qualifications and than I'll be glad to refute your claim and answer your question. I'd like to know who exactly am I talking to.

     

    "But you forgot that NOK is running on low volume vs. production capacity (i.e. q is small), so your constant "c" is not negligible anymore at current output levels!"

     

    By the way, thanks again for proving that you have no clue in economics theory!
    8 Jan 2013, 07:55 AM Reply Like
  • trader_xx
    , contributor
    Comments (815) | Send Message
     
    Good points however I think Nokia's ability to quickly ramp has been understimated...But the main issue will be supply chain constraints which Nokia will have little, if any, control over.. Bottom line, if Nokia can produce, they will reap the rewards...And to say the recent past is any indicator of future performance is stretching it a bit...Nobody is buying any stock based off last years performance...It's all about the future...
    6 Dec 2012, 01:47 PM Reply Like
  • Eld
    , contributor
    Comments (378) | Send Message
     
    Author’s reply » True, trader_xx, it is all about the future.

     

    However, looking at the past (and present) about what strategic actions are taken can lead to better understanding of the future. Take a company with large under-used factories, which are generating high fixed costs. If your production drops suddenly *and* you do not take decisions to adjust your production park, what will happen (in the future)?
    => You'll suffer from constant losses because your breakeven point is too high.

     

    This is exactly what is happening to NOK since Q1 2012. Only one factory, Salo, Finland, has been closed.

     

    Unless NOK is able to switch back to 15-20m smartphones per quarter, NOK should decrease its production park to decrease costs.

     

    Even with 10-15m Lumias per quarter, NOK will keep destroying value in its smartphone business, which means more and more cash burn.

     

    If you add to this the fact that feature phone division is suffering from a strong slow-down (dividing by more than 3 the EBIT), you have here a burning situation, that will be shown in Q1 2013: the phone division keeps destroying value in smart *and* featured phones.
    6 Dec 2012, 02:01 PM Reply Like
  • Financehulligan
    , contributor
    Comments (1079) | Send Message
     
    Are you really that stupid that you belive that cost of restruction will come in at the same levels when cost of restruction is already paid (most of it in and before q3-12) ??

     

    Looking at the past is nothing else then looking at the past. It didn´t work when you looked on Apple back in 1999 or Enron at $90 in 2000.

     

    Judging a company for the cost of the transformation process Nokia now made ​​it through, now that harvest has already begun, is particularly one of the bigger mistakes an investor can make today.

     

    Your friend is of the utmost financial elite
    6 Dec 2012, 02:53 PM Reply Like
  • Eld
    , contributor
    Comments (378) | Send Message
     
    Author’s reply » NOK generates EUR 3.3bn in smartphones with 38,000 employees, while AAPL generates $30bn with 30,000 employees (all activities included, tho).

     

    I *bet* there *might* be more restructuring charges and outflows in 2013.

     

    I'm not looking at the past. I'm looking at the past+present strategic actions, to have an idea on the future.

     

    I think FinanceHulligan you have little understanding of what financials say, this is why you hardly get my point here.
    6 Dec 2012, 03:06 PM Reply Like
  • Zhang Fei
    , contributor
    Comments (606) | Send Message
     
    "I think FinanceHulligan you have little understanding of what financials say, this is why you hardly get my point here."

     

    If you are looking for a reason to buy a turnaround tech stock, you won't find it in the financials. Tech stocks burn cash rapidly, don't sport much book value, and patents have a short half-life. Ultimately, the case for NOK rests on the view that the only time a 300m units a year cell phone maker has supply problems is when demand numbers are way beyond forecasts. If you genuinely think that NOK can't pump out a few million smart phones a quarter without running into supply issues, you should sell your NOK holdings or short the stock. I would.
    13 Dec 2012, 02:44 PM Reply Like
  • Eld
    , contributor
    Comments (378) | Send Message
     
    Author’s reply » @ Zhang: I think financials tell very well how a company is managed. Without going into details, the phone division of NOK supports high fixed costs, which makes the capacity to generate positive cash flow limited. As an example, RIMM is able to generate better cash-flow than NOK.

     

    The gross margin tells much. It is about efficiency of manufacturing. NOK has plants in countries where costs were once cheap (Hungary, South Korea, China), but not any more. NOK's gross margin is low because the company is designed for 30m smartphones per quarter, not 5m. The restructuring will help, to 'somme extent'. NOK can not support EUR 3bn OpEx as planned by Elop in 2013.

     

    And I have found interesting info that make me think NOK will shut down a few factories in the close future, which implies more costs and write offs. We'll see who is right :-)
    14 Dec 2012, 03:13 AM Reply Like
  • supafoo
    , contributor
    Comments (50) | Send Message
     
    Just curious, what's your projected ASP for Q4?
    16 Dec 2012, 02:36 PM Reply Like
  • Eld
    , contributor
    Comments (378) | Send Message
     
    Author’s reply » €160 for smartphones.
    16 Dec 2012, 02:39 PM Reply Like
  • Zhang Fei
    , contributor
    Comments (606) | Send Message
     
    I think higher, mainly because today's actual sales mix now seems slanted towards 920's, whereas NOK sold more of the low end phones in prior quarters. The issue, of course, is that NOK introduced it midway through the quarter. Still, AT&T now appears to have the black and white 920's available at retail everywhere, when it was delivery only a few days ago. Amazon now has the red, black and white 920's in stock with free 2-day delivery, meaning the Christmas window is open for another week. BBY is still delivery only, meaning store stock is non-existent.
    16 Dec 2012, 08:54 PM Reply Like
  • Eld
    , contributor
    Comments (378) | Send Message
     
    Author’s reply » What is your estimate, Zhang?
    17 Dec 2012, 07:27 AM Reply Like
  • Zhang Fei
    , contributor
    Comments (606) | Send Message
     
    "What is your estimate, Zhang?"

     

    Given the $200 difference between the 920 and the 820, and the recent high end tilt of Lumia sales, I'd say that, for 4Q, an ASP that's 10 euros higher than your estimate is realistic, and even conservative. Break-even still requires significantly higher unit volumes, but is less of a stretch.

     

    PS Don't let the overly-enthused NOK fans get you down - I think your brand of numbers-focused criticism is a breath of fresh air. Choruses of hosannas add little to the discussion.
    17 Dec 2012, 05:12 PM Reply Like
  • solucky
    , contributor
    Comments (6642) | Send Message
     
    I am still long in Nokia , but just closed my trading position at 3,22 EUR. Guess for the moment Nokia is priced fair, sure there is more potential for a longer timeframe.
    18 Dec 2012, 11:07 AM Reply Like
  • trader_xx
    , contributor
    Comments (815) | Send Message
     
    Considering the high demand for the Lumia line I believe Nokia made a wise move (and perhaps only choice) to keep their assembly operations going, even at diminished capacity... BTW I can find no info on where exactly the final Lumia product is produced..Finland ? China ? Both ? Either way, I'm convinced of Nokia's worldwide manufacturing capabilities and hope to see it flourish as so many are predicting....
    6 Dec 2012, 02:53 PM Reply Like
  • Eld
    , contributor
    Comments (378) | Send Message
     
    Author’s reply » NOK's smartphones are produced in China, Brazil, South Korea, Hungary and Mexico.

     

    To give you an example of over production, the factory in South Korea is designed to produce 10m smartphones per quarter.

     

    There is an obvious gap between production capacity and demand here.
    6 Dec 2012, 02:58 PM Reply Like
  • Financehulligan
    , contributor
    Comments (1079) | Send Message
     
    Maybee it where they produce some of the Lumia 920 that are beeing sold out :-)

     

    Have you even hold this phone in your hand and played around for a while, felt the love it creates ??
    13 Dec 2012, 02:39 PM Reply Like
  • trader_xx
    , contributor
    Comments (815) | Send Message
     
    Thanks for the info Eld much appreciated. Do you think the diverse manufacturing environment of Nokia should benefit as compared to Apple singular support from Foxconn ? I find it to be a better situation once Nokia really gets the ball rolling in filling capacity
    6 Dec 2012, 04:41 PM Reply Like
  • Eld
    , contributor
    Comments (378) | Send Message
     
    Author’s reply » NOK will not fill the capacity until Q4 2013 and on, in the best case.

     

    The capacity is way over-dimensioned, because it is designed for manufacturing 100m smartphone a year (2010: 102m smartphones), while NOK will reach at best 40-50m in 2013.

     

    In the meantime, more cash burn due to high fixed costs, i.e. value destruction.
    7 Dec 2012, 05:32 AM Reply Like
  • Mr. Knowitall
    , contributor
    Comments (7419) | Send Message
     
    Eld,

     

    Do you know if Nokia owns these factories and equipment outright?
    If so, how expensive is it to be running at maybe 10%?

     

    Also couldn't this unused capacity be a very valuable asset should sales really take off?
    18 Dec 2012, 07:58 PM Reply Like
  • Eld
    , contributor
    Comments (378) | Send Message
     
    Author’s reply » @ Luke:

     

    I do not know if NOK owns these factories, nor how they've been financed (cash or loan) [I bet NOK owns at least a % of them].

     

    These factories are designed for big volume, they are big factories, hence I bet property taxes, energy consumption, maintenance, etc... are pretty 'decent' costs.

     

    The question is: if sales take off, when will it happen? NOK's management did not make huge changes in production park (factory in Hungary for instance has been running on low volume in 2012, noone fired), hence it expects sales to take off. If it does not happen in Q4, the management will be changed.
    6 Jan 2013, 08:53 AM Reply Like
  • Zhang Fei
    , contributor
    Comments (606) | Send Message
     
    Nokia's English language quarterly reports are available at this link:
    http://bit.ly/VhEJPZ

     

    Q3 2012 pdf:
    http://bit.ly/T1kZeD
    Go to page 8 for the smart phone summary.
    Smart device = smart phone
    Mobile phone = feature phone
    13 Dec 2012, 12:05 PM Reply Like
  • solucky
    , contributor
    Comments (6642) | Send Message
     
    Eld are you sure that your production capacity is up to date ?

     

    I know that they move the Lumia production back to there own plants and that they build up a new factory in vietnam.

     

    I reduced my position slightly and for me Nokia is also a hold at the moment , exspecially the delays in delivery are a bit crazy here.

     

    Overall i think the stock will react 6-12 month before we see a real turnarround in the numbers, so i think we will see a slight dissapointment for Q4 ( relative less deliveries in Q4 ) and a rising stock in front of the Q1 numbers.
    13 Dec 2012, 02:10 PM Reply Like
  • Eld
    , contributor
    Comments (378) | Send Message
     
    Author’s reply » @ solucky: which part specifically is unclear for you? I have data on all of this :-)
    13 Dec 2012, 02:19 PM Reply Like
  • Financehulligan
    , contributor
    Comments (1079) | Send Message
     
    I have the feeling that the Eld are working very hard to try to convince others that the market is wrong.

     

    What a inconsolable task to have today :-)
    13 Dec 2012, 02:46 PM Reply Like
  • solucky
    , contributor
    Comments (6642) | Send Message
     
    I am not so sure how old your production capacities are ?

     

    I know that they switch arround , open new production plants and extend there plant in chennai ( guess ashaline ).

     

    If you are correct that they have still too much production capacity its silly to build new ones / increase old ones.

     

    It makes only sence if the new plants are much more cost effective.
    13 Dec 2012, 02:46 PM Reply Like
  • Eld
    , contributor
    Comments (378) | Send Message
     
    Author’s reply » Production capacities are based on nominal output. This nominal output (reached earlier in history) determines the size of the plant, the number of production lines, the size of the ground on which NOK pays taxes, the energy costs, etc...

     

    NOK is building a new one in Vietnam because costs of Hungary, Mexico, South Korea does not match the standards of the industry.

     

    NOK will probably shut down these factories in 2013, moving production to India and Vietnam, and maybe from China to Vietnam.
    6 Jan 2013, 08:56 AM Reply Like
  • Zhang Fei
    , contributor
    Comments (606) | Send Message
     
    "the delays in delivery are a bit crazy here."

     

    My reason for doubting a supply problem is simply because a company that makes 300m phones a year in all kinds of flavors should not have a problem making a few million smart phones in a single quarter.
    13 Dec 2012, 02:21 PM Reply Like
  • solucky
    , contributor
    Comments (6642) | Send Message
     
    They hold back production for the launch in china, or they have quality / supply issues. I calculate that they have sold not more than 1 million so far..and maybee another in the next 3 weeks.

     

    Thats not bad but also not enough, added confirmed deliverys here are delayed a few times.
    13 Dec 2012, 02:41 PM Reply Like
  • Zhang Fei
    , contributor
    Comments (606) | Send Message
     
    By the way, thanks for the post. The consolidation of seven quarters of smart phone results is a valuable reference that I'll return to for the next several weeks. You are one of the few skeptics on this site who actually provides useful contrary information.
    13 Dec 2012, 03:34 PM Reply Like
  • mikap72
    , contributor
    Comments (7) | Send Message
     
    "I *bet* there *might* be more restructuring charges and outflows in 2013."

     

    Actually there *will* be more layoffs as Nokia has not yet reached the target OPEX rate for end of 2013 it set to itself. So either Nokia has to change that target or it has to do some more restructuring actions. Last time I calculated from quarterly results, the demand was in around 300M euros of reduction for OPEX run rate, but the target could be also around 500M euros. That is during (by end of) 2013. Miracles happen, so if Lumias sell well, there might not be need to reduce OPEX next year, but these two things do not usually go hand-in-hand in bean counters balance sheets.

     

    My assumption is, that there will be more layoffs in Nokia and the announcement will happen during 1H 2013 in order to get full impact of those visible in 4Q 2013 results. However, the head count reduction target should be clearly smaller than this year (which was 10k).

     

    Note, that from already announced Nokia layoffs you will see some financial and headcount impact still in 1Q of 2013.
    17 Dec 2012, 08:27 AM Reply Like
  • oneinfiniteloop
    , contributor
    Comments (663) | Send Message
     
    Eld, on page 8(36) of that report (whose link was included by Zhang Fei) it reads:

     

    "In total, we expect cumulative Devices & Services restructuring charges of approximately EUR 1.8 billion before the end of 2013."

     

    And based on the following comment for q3 2012:

     

    "By the end of the third quarter 2012, we had recorded cumulative Devices & Services restructuring charges and other associated
    items of approximately EUR 1.4 billion."

     

    During which time they laid off 5300. So it appears that they are going to layoff another ~6000 people during 2013 from D&S.

     

    More importantly it is clear that they have specified an additional cash burn of Euro 1.8 B during 2013 from their D&S business in that report.

     

    Do you think there is another additional cash burn over and above the one they have explicitly called out in their report?
    18 Dec 2012, 09:14 PM Reply Like
  • Eld
    , contributor
    Comments (378) | Send Message
     
    Author’s reply » Yes @ oneinfiniteloop.

     

    NOK needs to get rid of a majority of its 38,000 employees (that are engineers, not production workers). NOK is turning into only a device manufacturer, from an ecosystem+phone maker.

     

    NOK is not in the same industry any more as AAPL or RIMM, it has to be compared to Samsung/HTC.
    6 Jan 2013, 09:00 AM Reply Like
  • Seppo Sahrakorpi
    , contributor
    Comments (1871) | Send Message
     
    Welcome back @eld!

     

    Many Nokia's former OS SW engineers are now working in Nokia specific apps, which has already started emerge as an important differentiating factor for Lumia line from other WP phones.
    6 Jan 2013, 09:19 AM Reply Like
  • Eld
    , contributor
    Comments (378) | Send Message
     
    Author’s reply » Thanks Seppo :)

     

    What are NOK specific apps?
    - Nokia maps (location-based, drive, transport, etc...) => this is L&C (6,366 employees), not included in the 38,000 employees of D&S
    - Nokia pureview => ok for that, but this is linked with hardware (camera), not the OS
    - others?

     

    The main OS apps are developed by MSFT, maybe to some little extent with NOK engineers.

     

    I will try to get a split of these 38,000 per function, that will help to anticipate where the future job cuts will appear (and how much it'll cost)
    6 Jan 2013, 09:27 AM Reply Like
  • Seppo Sahrakorpi
    , contributor
    Comments (1871) | Send Message
     
    @eld

     

    http://bit.ly/138wD05

     

    http://bit.ly/13bKuSb
    6 Jan 2013, 09:37 AM Reply Like
  • oneinfiniteloop
    , contributor
    Comments (663) | Send Message
     
    @Eld, as always, glad to read your posts.

     

    I would like to give the benefit of doubt here to $NOK, as I mentioned in their Q3 report (which was published about 3 months back) they have clearly identified $1.8B costs towards restructuring. AFAIK, management is responsible for reporting changed circumstances of such magnitude immediately to its shareholders. 38k employees is almost 6 times the number that they have quoted on their report and if this turns out to be true there will be major lawsuits filed by the existing financial institutions. The very fact that some of the big time financial institutions are still vested in $NOK makes me believe that 6k or less is more likely to be the case. Personally, I don't think Elop is going to take a risk of such magnitude.

     

    As @Seppo2 pointed out $NOK is moving its resources to focus on their Applications portfolio - Here.com (maps/augmented reality/etc., services related activities for the enterprises, etc.). PureView camera specific portfolio - capture, edit, publish/socialize capabilities, not sure if their NSN business that is growing requires additional hands, support partnership to extend the platform capabilities of windows phone 8, etc.

     

    Now you may argue that in order for $NOK to really shape up its business for true profitability and nimbleness they need to layoff 38k people (which is what I think you are alluding to) but, that is managements call based on how they see business is shaping up. At this point it appears that they are satisfied with 6k number.

     

    So far I have observed one common pattern with all companies that end up in trouble - usually the CEOs take an aggressive posture while reducing staff (a.k.a., "restructuring" to make it sound innocuous) - which is what I believe Elop did when he came to Nokia.

     

    Now it will remain to be seen if Elop did make a severe error in judgement (by a factor >6x). The only reason that I can think why he could have done that was to help reduce the possibility of a drastic drain on companies cash reserves - Q4 2012 and FY 2013 (starting with Q1) will speak volumes about Nokia's business and Elop's management skills.

     

    I sincerely hope that you are wrong on this one @Eld :)
    6 Jan 2013, 12:51 PM Reply Like
  • Eld
    , contributor
    Comments (378) | Send Message
     
    Author’s reply » @one:

     

    Extract from report Q2 2012:
    "Nokia plans to reduce up to 10 000 positions globally by the end of 2013"

     

    In Q3 vs Q2, NOK laid off 8k employees.

     

    You do not need to be an oracle to:
    - see that NOK is hurrying up with its restucturing plan (the target "by end of 2013" will be reached "by end of 2012")
    - anticipate that more lay-offs are coming if you compare with other industry competitors and statement just above :)

     

    NOK's management is not good at forecasting:
    1. Symbian lifetime was way overestimated (impact of -0.3bn cash loss in 2012)
    2. Restructuring costs were underestimated (target savings were "> EUR 1bn" from Q2 2011 to Q1 2012, and jumped to EUR 2.3bn in Q2 2012, which is more than x2 just in 1 quarter!)
    3. Guidances for Q1 and Q2 this year were missed by the management:
    3.1. op margin D&S Q1 forecasted 0%+/-2% [real:-3%]
    3.2. op margin D&S Q2 forecasted =<3% [real: -9.1%]

     

    My 2 cents is that Elop will be fired after Q4 results, and more restructuring will be announced during Q1 2012.
    6 Jan 2013, 01:15 PM Reply Like
  • Charles Santerre
    , contributor
    Comments (1242) | Send Message
     
    Eld: still think Elop will be fired after Jan 24?
    13 Jan 2013, 08:58 PM Reply Like
  • Eld
    , contributor
    Comments (378) | Send Message
     
    Author’s reply » I want to see what is in the report.

     

    Atm NOK is not managed by Elop, but by consultants.
    14 Jan 2013, 06:18 AM Reply Like
  • solucky
    , contributor
    Comments (6642) | Send Message
     
    I am surprised if the marked recognize that Nokia might fall behind Yulong and out of the TOP 10 smartphone producers this quarter.

     

    I want see close to 4$ or improved marketcap to be back.
    14 Jan 2013, 11:19 AM Reply Like
  • Eld
    , contributor
    Comments (378) | Send Message
     
    Author’s reply » Ladies and gents

     

    Please check this out, and look at my point #2

     

    http://onforb.es/VSPlZ1

     

    You see, I was not telling lies ;-)

     

    Hope it'll help you understand better Nokia's business mechanics
    13 Feb 2013, 02:40 PM Reply Like
  • solucky
    , contributor
    Comments (6642) | Send Message
     
    Guess Gartner have the Asha Line not as feature phones, a big questionmark will be if the Ashas can compete with entry level droids.

     

    From Statcounter it looks they lost aginst the droids in Q4/ JAN
    13 Feb 2013, 04:15 PM Reply Like
  • Mr. Knowitall
    , contributor
    Comments (7419) | Send Message
     
    "The next two quarters will tell us whether the 4Q12 pricing issue in Africa and LatAm was just a wobble. "
    13 Feb 2013, 07:31 PM Reply Like
  • Eld
    , contributor
    Comments (378) | Send Message
     
    Author’s reply » It's time to a little update soon on this instablog :)

     

    You will notice that restructuring extra costs and sharp fall of featured phone market, which I forecasted, are a reality in Q1 2013 ;-)

     

    Will provide more insight soon on where NOK is going.
    18 Apr 2013, 01:12 PM Reply Like
  • solucky
    , contributor
    Comments (6642) | Send Message
     
    Thought you are not active any more :).

     

    I remember and accept your warnings, but still buy at these and lower levels.

     

    It works one time why not a second and third time.

     

    I guess we will not see huge decline in symbian phones anymore, and i am also pretty sure that smartphonesales saw there lowest number this quarter.
    18 Apr 2013, 03:39 PM Reply Like
  • Zhang Fei
    , contributor
    Comments (606) | Send Message
     
    Samsung's smartphone sales during 4Q12 were 64.5m units vs 55m units for 3Q12. While these numbers are an order of magnitude larger than Lumia sales, the quarter to quarter growth is only 17%, compared to the Lumia's 27% growth from 4Q12 to 1Q13. The NOK story is still unfolding.
    http://tcrn.ch/11FYNSa
    http://bit.ly/17L5dzz
    19 Apr 2013, 08:51 AM Reply Like
  • Zhang Fei
    , contributor
    Comments (606) | Send Message
     
    Apple's smartphone sales during 2Q13 (ending 03/2013) were 37.4m units vs 47.8m units for 1Q13 (ending 12/2012). While these numbers are almost an order of magnitude larger than Lumia sales, the quarter to quarter growth is -22%, compared to the Lumia's 27% growth from 4Q12 (ending 12/2012) to 1Q13 (ending 03/2013). NOK is clearly the dark horse in this race, but it's a long way from being over:
    http://bit.ly/WNcVSw
    http://bit.ly/15H03oX
    23 Apr 2013, 09:41 PM Reply Like
  • Seppo Sahrakorpi
    , contributor
    Comments (1871) | Send Message
     
    @Zhang Excellent observation. So Lumia volumes actually beat iPhone by give or take 63%. Excellent.

     

    And comparing iPhone volume drop to Nokia's mobile device volume drop of 27%, it is clear that the sky is not falling.

     

    See my more detailed comment here:
    http://seekingalpha.co...
    24 Apr 2013, 09:43 AM Reply Like
  • solucky
    , contributor
    Comments (6642) | Send Message
     
    If i look to Germany alone, it looks not to bad with 6,8% to 19%.

     

    From the chart alone Apple is beatable :)

     

    http://bit.ly/Z067F7
    24 Apr 2013, 11:01 AM Reply Like
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