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Zhang Fei

Zhang Fei
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  • Nokia Upgrades Will Create More Upside [View article]
    "Even the maniac Cramer belives in Nokia... man that is bad news for real."

    Actually, Cramer's always said sell NOK. His reference to NOK was as an instance of why everyone should own a speculative stock as a small part of his portfolio in order to have to potential for outsized gains. Cramer's a showbiz figure whose specialty is spewing stream-of-consciousness thoughts without any research. NOK fell from 4.82 at year-end 2011 to 3.95 at year-end 2012. All things considered, 2012 was a horrible year for NOK. The reason the stock went down so much in mid-year 2012 is because all the analysts thought it would be even more horrible than it turned out to be and took the stock down to a level that suggested impending liquidation in the first half of 2013.

    However, it's clear that NOK's Windows Phones are getting some traction. As Wim noted, NOK sold 1m Windows Phones in all of 2011, and 4.4m of them in 4Q12 alone. What's more, in 2011, NOK couldn't sell all they made, whereas in 4Q12, NOK couldn't keep up with demand. I think NOK's sterling reputation in feature phones will cause a lot of former users to migrate to the Lumia line, including no small number of Iphone users. It just takes time for the knowledge that NOK has a competitive smartphone out there to percolate down to the average consumer.

    You're thinking of this as some kind of major advance in the stock price. It's not. The stock price is below NOK's stock price at the beginning of 2012, back when NOK's Windows Phone sales volumes were negligible, and it wasn't even clear if Lumias could compensate for the collapse in Symbian phone volumes.

    Now that bankruptcy is off the table in the short term, a lot of portfolio managers will pick up a little NOK just so they can have the opportunity to get some fraction of a % in increased return in their funds. Given how tiny NOK's market cap is, and how crowded the short is (20% of shares outstanding), shorters will need plenty of Dutch courage, and cash to deal with margin calls as the stock inches up due to institutional interest.
    Jan 11 04:03 PM | 14 Likes Like |Link to Comment
  • Lampert's Grip On Sears Weakens [View article]
    "I guess we have to say also that Lampert and Berkowitz are fools."

    It's possible to simultaneously be highly-capable and be wrong on or fail in a given field. Even experienced specialists in various industries lose to the competition and in some cases, over-invest because of excessive optimism about the industry's prospects. Neither Berkowitz nor Lampert has run anything (successfully) other than a hedge fund. Given Sears's losing record over the years, I'd say they are wrong, and unwilling to admit their mistakes.

    Note that plenty of highly-capable fund managers have abandoned Sears, so one could also say that if you side with Lampert and Berkowitz, you are implying that those other fund managers are fools. I think the simpler explanation is that they are wrong. The problem isn't that they're wrong, but that they're unwilling to take the steps to remedy their mistakes.
    Dec 4 05:16 PM | 9 Likes Like |Link to Comment
  • China's Giant Catch-22 [View article]
    BG: "In the last 30 years, China came from being one of the poorest country in the world to be the 2nd largest economy in the world."

    That's really misleading. In per capita income terms, China is a middle-ranking country, which is far improved from being at the bottom of the list, but nowhere near number two. It's a lot like comparing an entire extended family's income to that of a single individual.
    Jul 27 10:15 PM | 9 Likes Like |Link to Comment
  • Nokia's Revival: The Ship Has Sailed [View article]
    "Financials to me in some ways are trailing indicators (and are usually at least a quarter or two behind)."

    Consumer gadget companies are a lot like oil companies. Their balance sheets are life support systems for oil strikes. What NOK's financials tell us is not that management is fiddling the books or is incompetent at financial management, but that it hasn't - in recent years - managed to do the consumer gadget equivalent of striking oil - producing a wildly profitable gadget that consumers want in large numbers. The reason for those lousy financials is simply that NOK had the equivalent of its oil fields petering out without warning while being saddled with a workforce that was geared for peak production volumes. However, the moment it strikes oil again, those financials clear up. So it really boils down to whether NOK's current and future products are worth their salt, not financials that merely reiterate the fact that NOK has had a dry spell with respect to getting a hit product out that was simultaneously profitable.
    Dec 16 10:01 PM | 8 Likes Like |Link to Comment
  • China's Growth: Far Less than Meets the Eye [View article]
    MChen: "While Americans think only of next quarter, the Chinese plan for the next 5000 years!"

    That's pretty impressive - to think that Mao Zedong's mass famines (Great Leap Forward and Great Proletarian Cultural Revolution) were planned 5000 years ago. It's also kinda cool that 5000 years ago, the Chinese were planning to ditch all their traditions (polygamy, legal prostitution, traditional costume, absolute monarchy) and adopt Western customs wholesale.
    Aug 3 07:35 PM | 8 Likes Like |Link to Comment
  • There Is Still Time To Short Apple [View article]
    Iphone units:
    1Q12 (99 days) 37.04m
    1Q13 (92 days) 47.8m (29% increase despite fewer selling days, due to relentless carrier additions)
    1Q14 (92 days) 51m (only 7% increase despite no decrease in selling days and relentless carrier additions)
    This looks a lot like the peak of a parabola.
    Jan 29 10:34 AM | 7 Likes Like |Link to Comment
  • 3 More Things You Need To Know About Amazon.com [View article]
    Kroger, the blue chip mass market grocer, trades at 1/5 of annual sales. So it's conceivable that AMZN might eventually trade for $15b, or roughly $30 per share. Unlike AMZN, KR actually makes money.
    Sep 27 07:19 PM | 7 Likes Like |Link to Comment
  • 5 Initial Thoughts On The End Of Nokia As We Know It [View article]
    I don't understand the philosophy behind the acquisition. I think MSFT would have been better off making an equity investment in NOK instead of buying the division. Why buy the cow when you can get the milk for free? Hand NOK the cash to do store-level marketing (spifs, tchotchkes for salespeople, et al), and wait for NOK's sales to get big enough to start producing net royalties for WP8.
    Sep 3 07:18 AM | 7 Likes Like |Link to Comment
  • Nokia's Beaten Down Stock Finally Gets Some Asha [View article]
    "It is very telling of this being a matter of perception that Ashas are being accepted as smartphones while even their underlying platform is far inferior to Symbian S60 when it comes to its general ability..."

    Not surprising at all. This is what technology life cycles are all about. The early adopters have been milked for profits. The late adopters will buy smart phones - at much lower price points. And that will provide severe moments of angst for AAPL shareholders - what was once a scarce good will go mass market, taking margins down with it. Just another consumer gadget product cycle, but completely alien to AAPL's experience.

    Apple's market share will crash because smart phones will replace feature phones at feature phone price points. The same will happen for tablets - they will replace e-readers at e-reader price points. And that is why AAPL's stock is probably capped in the 700 range, whereas its long term price is probably in the low hundreds or even in the high double digits, as it becomes a niche player in mobile phones and tablets the way it is in PC's, assuming that mobile phone and tablet users are as loyal as Mac users (which may prove to be false, given the short life span of many consumer gadget brands).
    Dec 20 09:44 AM | 7 Likes Like |Link to Comment
  • Apple Trading At 2.56x 2016 Cash Flow [View article]
    Next article header - AAPL trading at 0.0256x 3012 cash flow.
    Dec 10 07:30 PM | 7 Likes Like |Link to Comment
  • Beware Of Research In Motion And Nokia Near Year-End [View article]
    "The way to do a turnaround is to invent new markets out of scratch, like Apple did 3 or 4 times in the past 10 years, not by building a better smartphone than the myriad of existing ones out there. That strategy is absolutely not what Apple did to affect its turnaround, has never been done successfully by any consumer electronic company in the history of the world, and it will not work this time either."

    Apple turned itself around long before it came up with the Iphone. And neither its turnaround strategy in 1997 nor its smartphone strategy in 2007 involved inventing new markets from scratch. Macs obviously existed prior to Apple's turnaround, and smartphones also existed prior to the Iphone's introduction, with Blackberry, Palm and HP being the dominant players. While it's impossible to fault his skill at arbitrating, managing and being the final voice on design issues at Apple, Steve Jobs had an ego problem that involved blowing up his achievements on the ideas front and making himself out to be some kind of pioneer, when all he was doing was implementing evolutionary changes in ways that more often than not captured the zeitgeist. Detractors called this his "reality distortion field". Jobs wasn't some big ideas guy - he was the Tom Ford of the technology industry - an aesthete who happened to have a good eye for what worked and what didn't in consumer gadgets and had this flair for marketing. Given Apple's success had nothing to do with strategy and everything to do with Jobs's discerning eye, the burning question is whether they can find in Apple's ranks someone with his talent. Given the slew of me-too products from Apple in relation to its earlier products, the answer is probably no. For the most part, there is no such thing as an indispensable man. When Apple's second fall from grace is chronicled, Steve Jobs will prove to be the exception to that rule. Jobs was sui generis - one of a kind.
    Nov 25 11:06 AM | 7 Likes Like |Link to Comment
  • Beware Of Research In Motion And Nokia Near Year-End [View article]
    "NOK is a giant with 100k employees and three divisions, sinking fast, bleeding money. Even if Lumia is a success, smartphones can't turn it around."

    That would depend on how big a success the Lumia is. A Yahoo China article states that the Lumia has had orders for 2.5m units in the first 20 days In all of 2Q12, the new Lumias sold 2.9m units.
    http://bit.ly/UxYL77

    Apple is a giant with 72K employees. Around 2/3 of its profits come from Iphones. What would happen to its stock price if its cell phone unit volumes went down in half? How about if it went down to 3m units a quarter?

    Selling the same product over and over to the same customers will get more difficult. Apple is successful not because Tim Cook is a supply chain expert*. It's successful because Steve Jobs caught the zeitgeist and, for a period of time, was able to charge an arm and a leg for a user experience that the customer had been looking for and didn't know it yet.

    Apple's problem is that it is manufacturing me-too products with respect to its predecessor product lines, and consumer products customers are always looking for something new. If they wanted to buy the same old Iphone, they'd simply keep their existing one and switch over to Walmart's $45/month Straight Talk unlimited voice, data and text plan rather than enroll in AT&T exorbitant $80/month bottom-of-the barrel plan.

    * If Tim Cook were a supply chain expert, Apple would be running manufacturing in-house instead of outsourcing it to Foxconn. Foxconn's Terry Gou is the supply chain expert. Cook just takes the credit so he can distract people from finally figuring out that the void Steve Jobs left cannot be filled. Steve Jobs designed nothing, but he had a keen sense of what constitutes good taste and an instinctive feel for what worked and what didn't, and he dragooned his underlings into sending him new product iterations and modifying them until they fielded something he felt was "insanely great". Jobs's talent was doing all of that and doing it on schedule. The problem with replacing Jobs is that this kind of thing constitutes innate talent and cannot be taught, any more than anyone can be taught to become Michael Jordan. Apple could have done without the other Steve, Wozniak. It could not have done without Jobs.
    Nov 23 10:06 PM | 7 Likes Like |Link to Comment
  • Microsoft Is Shooting Itself In The Foot By Acquiring Nokia [View article]
    MSFT could have made an equity investment in NOK. I don't understand this acquisition. NOK was fighting for its life and presumably worked harder and moved faster. As a MSFT division, I expect NOK's phone unit to become fat and lazy and tied up in bureaucracy.
    Sep 3 07:43 AM | 6 Likes Like |Link to Comment
  • New Look At Nokia - Low End Lumias Are Crucial [View article]
    "It seems NOK has a built-in advantage in that they have been competing in pricing-challenged markets for years now, unlike AAPL."

    Iphones are a poor man's Patek Philippe or Rolex. Once Iphone prices start sliding, and the premium image begins to evaporate, a lot of users will migrate to the familiar Windows interface. MSFT did switch its entire PC interface around to accommodate touch screens, which are seldom available (or used) on PC's, so there's no question that it's committed to WP8. Bottom line is that in the next several years, AAPL's downmarket Iphone will end up simultaneously crashing its margins and unit volumes.
    Aug 7 01:02 PM | 6 Likes Like |Link to Comment
  • New Look At Nokia - Low End Lumias Are Crucial [View article]
    "People ask who needs a 41 megapixel phone. I say everyone needs it who can afford it. It's extremely fun to use."

    It's not that expensive. The ripoff cell phone contracts offered stateside by all carriers force non-data subscribers to subsidize new smartphone sales, anyway. And the 1020 is only $100 more than the Iphone 5 on contract. Put it on a credit card, and it's a few bucks more in minimum monthly payments. If the 1020's camera features were offered on the Iphone, it would be continually out of stock, with month-long waiting lists, at the $299 price. The real question is whether the 1020 can get past the perception that WP8 is crippled because of a dearth of popular apps.
    Aug 7 12:48 PM | 6 Likes Like |Link to Comment
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