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Buy Nokia On This Dip

Feb. 21, 2013 12:37 PM ETNokia Oyj (NOK)AAPL, BB, DELL-OLD, HPQ, SONY69 Comments
Catalyst Capital profile picture
Catalyst Capital

With the recent surge in Sony (SNE) on the back of the falling yen, which I wrote would happen back about 6 weeks ago, and with the rise in BlackBerry (BBRY), Hewlett-Packard (HPQ), and Dell (DELL) at the same time as Apple (AAPL) has been crashing, investors have been bombarded with news from all fronts in the consumer electronics industry and likely have forgotten about the stock that started this entire trend: Nokia (NYSE:NOK). Over the past few weeks Nokia has quietly pulled back from highs around $4.70 about a month ago.

I believe now is the time to pound the table on Nokia again. The reason is threefold:

(1) Continued improvement in Nokia Siemens Network

(2) Partnership with China Mobile

(3) Roll out of tablets

(1) Continued improvement in Nokia Siemens Network

Did you happen to catch those numbers out of NSN? NSN is fast emerging as the leader in the ongoing LTE transition around the world. Q4 results in this division were very impressive: all time high non-IFRS operating margin of 14.4%, net sales of $5.3 billion, 14% higher than Q3 2012. In addition NSN reported they are now targeting even more than the $1.3 billion in cost reductions by the end of 2013. On a standalone basis this division could generate greater than $2.7 billion in profits. Think about that for a second when comparing it to the entire company's market cap of $14 billion.

(2) Partnership With China Mobile

China Mobile (CHL) recently announced that it is going to heavily subsidize the Lumia 920T phones. The purchase price after subsidies is basically $0 vs. a purchase price of roughly $700 for the iPhone, which isn't subsidized. In a country where the average annual income is around $6,000, this is a big deal.

The partnership with China

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Catalyst Capital profile picture
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Comments (69)

Mike_Grasbie profile picture
Big sport corporate switched to Nokia Lumia:

Andreas Hopf profile picture
Thanks, interesting to see a UK business not selecting the BB Z10, which is "mandatory" according to some BB fans on BBRY threads :)
solucky profile picture
They was since 2011 NOK customer, but agree there are first signs that they are attractive for business consumers.
BTR2RSK profile picture
AnyO: I disagree. WinRT has a place equal to the iPad & Android tablets of this world. It will be developed further. The main benefit is ARM: no fans, thinner, lighter, cooler, longer battery performance. Not everyone needs full Windows on the couch or for many business uses, presentations, etc. Tablets are not for full, heavy duty work anyhow. Having Office in there is a great start, and as more apps are developed it will become richer. It's not selling very well...yet because people don`t know about it, it's still in its infancy.
22 Feb. 2013
ARM's power consumption advantage over Intel is quickly fading away if it hasn't completely evaporated already. As Intel continue to combine it's process lead with all the R&D it has spent on making it's chips more efficient, there will be no reason not to use their chips for the looming convergence. As I said above, the convergence of phones and PC's is nearer than you think. When that happens, full blown Windows systems will have the advantage because they make the business world go round. ARM OSes (iOS, Android) only make people's lives go round. To me Microsoft is going to have the advantage here, and Intel has the huge advantage in running Microsoft software (the real stuff, not the phony RT stuff).
solucky profile picture
Thats why i ad a few Intel in my portfolio.

Enough dividend to wait, and a good chance to make 30% within next 2-3 years.
BTR2RSK profile picture
AnyO I agree w/ you re the convergence of phones, but I think you are way too optimistic in your timeline. No way are phones going to have the muscle to power a PC-like experience in 1-3 years without returning to brick sizes and fans added.

As an exemple I use my Samsung dual core laptop with 4GB of RAM & W8. As I soon as I open a 3rd tab in Firefox, with Outlook running as well, the fan comes on to cool down the PC.

Don`t forget I am not using any antivirus, shutdown Windows Defender! Am running SkyDrive and One Note in the background a few small programs like Sandboxie, UltraVNC & Clipomatic. This laptop is running lean & has only an 11.6 in screen at the lowest display brightness.

I have worked in the computer services business for the last 8 years and while I have seen great progress in computer related equipment, I would be extremely surprised to see a phone being able to render a PC like experience via a dock with a 14-15 inch screen. Too much muscle generating too much heat make this convergence only possible with a completely new processing technology, one that is able to deliver much more power yet keep the heat down.

Maybe in 10 years will we see your vision being realized of a decent phone-PC experience.
22 Feb. 2013
While some will be disappointed when they don't unveil a tablet this week, I won't. There's no money to be made in low-end tablets.

I only like the idea of Nokia getting into tablets if they get into mid-range to high-end full Windows 8. The main reason for this is that undoubtedly in the not too far future (could be as soon as 1-3 years away), phones are going to turn into PCs. I don't mean yeah you carry it around and it does a lot of the same stuff as a PC but you still use your laptop when you get to work. I mean when you get to work you plug your phone into a dock and use a keyboard / mouse / monitor to run full windows 8 (9?) off of it. That's the next big leap in smartphones, and Nokia has an inside track on it by partnering up with Microsoft. Start partnering up with Intel to work towards this goal as well. Strive for WinTelOkia.

WinRT is going to bust, really hope they don't even bother making a tablet on it. WinRT was just a mistake by Microsoft imo, should have left it as WP8 / W8 to make the eventual unification that much smoother.
solucky profile picture
Low end is funny

Just read an announcement 11,6" ISP tablet, quadcore in alu housing for 350. Smaller sizes for under 300....

In 2-3 years the phone/tablet marked is a low margin market.
ewmpsi profile picture
Nokia Catwalk To Be Super Svelte?

"Informer “dsmobile” did mention that the up and coming Nokia Catwalk is going to be an extremely slim and good looking device, running on the Windows Phone platform, of course.

Apart from that, its seems that Nokia has already begun to work on a tablet case, although it will be a different manufacturer who will churn out the tablet itself. Having said that, this does not mean that Nokia will use Mobile World Congress that is happening early next week as the platform to deliver word on such a tablet. I personally think that this will occur much later down the road."
ewmpsi profile picture
Telefonica Chooses NSN for LTE

Nokia-Siemens Network (‘NSN’) – a 50-50 joint venture between Nokia Corporation (NOK) and Siemens AG (SI) has started deploying LTE (Long Term Evolution) for Movistar Chile, a subsidiary of Spanish Telecom giant Telefonica SA (TEF).

As part of the contract, NSN is rolling out a 4G LTE network in the 2.6 GHz frequency band for the Chilean subsidiary of Telefonica. NSN is implementing its Flexi Multiradio 10 base station, which will allow Movistar to upgrade its site to 2.6 GHz while reducing time space and power consumption, thereby reducing the capital expenditure for Telefonica.

NSN is also implementing Node B base station capacity expansion and Radio Network Controller expansion that necessarily control and manage the RAN (Radio Access Network). Additionally, to ensure a smooth roll out of the network, the contract also includes an upgrade of the Operational Support System (:OSS) network optimization and care services.
ewmpsi profile picture
Unannounced Nokia RM 860 confirmed to be a high-end handset, Nokia tablet also spotted in the wild http://shar.es/jXXys

Alan Mendelevich from Adduplex has been trawling through their data and has been able to offer some more information about some of Nokia’s unannounced handsets.

He notes the Nokia RM-860, which has turned up on Verizon, appears to have an HD screen. The Nokia RM-867 is the Nokia Lumia 920T, suggesting the Verizon handset is part of the same Nokia Lumia 920 range.

He was also able to confirm the Nokia Lumia 720 had unsurprisingly an WVGA screen.

He also revealed the Nokia RX-108 Windows 8 PC, which is presumably a tablet, and may be running either Windows 8 or Windows RT.

Lastly the Nokia RM-892 is another Windows Phone handset found in India.

It is already very likely we will see some low-end Windows Phones announced at Mobile World Congress 2013. Hopefully we will also see a few high end devices from Verizon show up too.
BTR2RSK profile picture
ewmpsi: how believable is this news about new phones & tablet?
ewmpsi profile picture
Well, here is what's believable, there are at the very least (2) new Nokia phones running Win8 that will be shown at MWC 2013.

What is also a pretty sure bet is that there will also be a Verizon’s exclusive device (maybe one of the two maybe not).

What is rumored but is unlikely is that there may be as many as (4) phones "assuming Catwalk and Pure View aren't one of the two sure bets”.

What is also rumored is talk of a tablet, but honestly that's just too much stuff for one show and with supply issues to boot.

My guess is you'll only see (2) functioning phones (at least one a Verizon exclusive). You'll see (1) mock-up prototype phone (images only) and they will hint at a Win8 (not RT) tablet for the future (fall 2013).
ewmpsi profile picture
Nokia Lumia 720, 520 photos leak ahead of MWC
In a few days, we could very well see the entry- and midlevel Lumias officially crop up at the mobile confab.

Mystery Nokia Lumia appears with Verizon bands at FCC
The phone in question is known only as the RM-860, but with support for LTE bands 4 and 13, it carries the telltale marks as a Verizon smartphone http://engt.co/X20TIa

520, 720 will probably be in the low end "Android" fight and available at multiple carriers and the RM-860 Verizon exclusive (could) be the Catwalk, since we don't see uncovered pictures/specs it is likely a dead-demo @MWC (look but don't touch).
Mike_Grasbie profile picture
Nokia Lumia smartphones to be used in select sales operations for Coca-Cola

Andreas Hopf profile picture
The red one. With black glass. And red tiles. Wow! Now, only the blog design has to return to its former information centered b/w cool ;)
ewmpsi profile picture
Here's Why We Think Nokia's Worth $5 http://onforb.es/11ZGp6T

a Trefis piece on Forbes website
KIA Investment Research profile picture
*link verified*

ewmpsi profile picture
Yeah, I can get a little too fast sometimes ;-)
Andreas Hopf profile picture
As suggested above, pick up a Lackberry. That'll slow you down nicely.
Graphitesa profile picture
Long $NOK for awhilleee.. until $10 atleast.
Mike_Grasbie profile picture
Long queues for the Lumia in Brazil launch with the Lumia 920 sold out on the first day:
Big players dropping the price & causing fear to get in cheaper. Once they strike look for a quick jump back above $4. Nokia is proving to become a success. All the pieces are falling into place and a tablet is imminent. Business's will want to work with tablets with MS Office and Excell. Nokia will have an inovative tablet waiting. Don't forget Nokia supplied the Win8 tablets to microsoft for App development.
Andreas Hopf profile picture
If big players wanted to get in cheap for the long run, they could have done so multiple times in the recent past? I have the impression it's all pump & dump on a low level scale; never letting the stock surpass $5.
BTR2RSK profile picture
jeff: What exactly do you mean & please provide a link when you say "Don't forget Nokia supplied the Win8 tablets to microsoft for App development." ?

Thank you.
ewmpsi profile picture
Nokia Siemens Networks and LSI Collaborate on Wireless Infrastructure Solutions


"LSI is very pleased to be collaborating with Nokia Siemens Networks on innovative mobile broadband solutions," said Jim Anderson, general manager for LSI's Networking Solutions Group. "The LSI Axxia line combines ARM processor cores with our unique Virtual Pipeline™ acceleration technology to create a platform for next-generation mobile broadband solutions and other applications. Our advanced software and emulation capabilities ensure accelerated time to market for our customers."

LSI will showcase its portfolio of networking acceleration solutions at Hall 6 - Stand 6B60 at the GSMA Mobile World Congress in Barcelona, Spain, February 25-28. LSI will announce its participation in the Linaro Networking Group at Mobile World Congress as well.
KIA Investment Research profile picture
working link: http://bit.ly/XH80El

lol ewmpsi, you're going to have to start paying me!
ewmpsi profile picture
that one works for me...oh well :-)
ewmpsi profile picture
WP8 Nokia Lumia range introduced to Brazil to long lines http://shar.es/japql

"The Nokia Lumia 620, 820 and 920 were released in Brazil yesterday, and Faixamobi.com reports the handsets had a good reception, with long queues at the official Nokia stores even before the stores opened.

Faixamobi reports that it was noticeable that the vast majority of people were buying just the top line Nokia Lumia 920 at the Eldorado store instead of the cheaper models, with the White Nokia Lumia 920 selling out completely.

Brazil is Nokia’s fifth largest market behind China, India, the United States and Japan. During the Brazilian launch of the Lumia 920, 820 and 620, Almir Luiz Narcizo, Nokia Brazil’s general manager, warned Samsung and Apple to watch out.

“The 10-year-old Symbian OS was facing several problems, and Nokia needed to renew it. Nokia’s brand is admired in Brazil, but our portfolio wasn’t meeting consumers’ demands,” Narcizo said. “Now, we have an excellent portfolio. Be careful Samsung and Apple because we are now extremely competitive.”

He reported “excellent pre-sales of Lumia 920 and devices have sold-out,” but did not reveal specific sales numbers.

Interestingly Nokia is manufacturing both the Lumia 620 and 820 locally at its Manaus plant in the state of Amazonas. Nokia is also studying how to locally produce the 920, but it still lacks the volume to justify the move."
ewmpsi profile picture
Thanks ;-)
WhatdoIknow1 profile picture

I accidentally pressed report abuse while trying to hit the link from my phone. Sorry
Maximus65 profile picture
NOK stock is stuck in the mud. Like watching paint dry.
after 6 years of apple products, i am happy to say that i love my new Nokia lumina 920... i do not know about the supplies problem.. every stores i visited here in the state of GA have Nokia Lumina 920 in stock..
Andreas Hopf profile picture
I doubt you own a "Lumina".
Why the hell everyone calls it "Lumina". I know it isnt a big deal, but it really pisses me off anyways.
Maximus65 profile picture

Remember the Chevrolet Lumina? Nice car.


I would not want a flagship product name associated with that lemon either.
Microsoft should buy Blackberry and control the enterprise space. It's still time before BB10 really takes off. I can't imagine what would happen to Windows phone OS without Nokia. Nokia is trying hard to succeed with Windows. Hopefully, it will gain market share this year. I
I like the numbers supporting Nokia, but I'm afraid if they disappoint at MWC, the stock will take a plummet. Not enough people I believe are looking at the long-term with Nokia. Last time I checked, most business' run Windows, so it's just common sense for Nokia to release a W8 tablet. And from the newest products in the Lumia lineup boasting some pretty amazing specs, I think any tablet Nokia releases will probably be innovative enough to impress.

Just still trying to figure out if the stock takes a significant dip on MWC, if I want to take the chance and enlarge my position. I see big gains/big risk.
Catalyst Capital profile picture
I think using a strategy where you buy in piecemeal would be a good strategy. I mentioned this in my article above. It limits the risk of going in too heavily at the wrong time and it gives you the opportunity to add on a dip and therefore widen your mental stop out point.
Nokia (NOK) is great buy at $3.75... I just bought some! Nokia is going to be classic turn-around story!!! They have billions coming in from Microsoft to market their products. Almost a "can't miss".
Abu Bakr Hussain profile picture
I bought on the dip! Down a few percent already. Still, I'm waiting on a nice pop (I hope) for MWC for my trading position. Kantar Worldpanel report should also be out soon, which will give a decent idea of Nokia's recent sales.
solucky profile picture
Kantar might show a bit, but i dont bet on NSN and tablets.

NSN will not have the margins that they showed in Q4, 3-5% are more realistic.

Tablets maybee in fall, but if i see the latest announcements from other companys soon a low margin business.

Another 5-15% downtrend and i might buy another tiny position.
qdmj6 profile picture
Nokia should keep NSN; it is same kind of asset like Navteq; and The partnership with MSFT. Nokia should launch its well-built budget-class tablets soon; enterprises (most of them using Windows OS) are waiting for them. At the share prices of today I myself would not hesitate to switch from BB to Nok.
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