Anche Nokia fa dei pasticci


  By: Moderatore on Martedì 10 Giugno 2003 16:50

David Sterman analyzes the Nokia earnings call at 8 a.m. EDT. 06/10/03 08:14 AM EDT Nokia's management has spoken of how an aggressive revamp of the company's cell-phone lineup would enable the company to retain its premium pricing. The strong margins are a testament to that effort, but it does look as if Average Selling Prices, or ASPs, slipped in the quarter. If the slump in global handset sales lasts for a few more quarters, then the company's margins may be at risk, as competitors play catch-up. Notably, Motorola said yesterday that a pair of Chinese competitors are now siphoning off growth in the fast-growing China market. Nokia attributed the weakness in Asia to SARS, but concerns of incipient competitive threats are likely to loom large among analysts. Look for shares of Nokia (NOK:NYSE) to open slightly lower this morning. Strong margins helped to offset tepid sales growth, as the company maintained EPS guidance for its second quarter. But investors will likely bag profit after the stock's recent run. We'll have all the details on Nokia's outlook as the company's midquarter conference call gets underway at 8 a.m. EDT. But there is good news coming from the Networks division, which has been a black hole for several years. Heavy cost cuts and a stabilization of revenues have helped to end the red ink. As competitors continue to exit this industry, the outlook could actually be reasonably positive for Networks. It's been a long time since that sentiment has been uttered. Shares of Nokia have been risen nearly 50% since early March in anticipation of a brighter economy. But it's fair to wonder if the cell phone industry will ever return to its former glory. Low-cost Asian manufacturers keep gaining traction, and appear positioned to sop up any new demand that develops. Looking at the chart from the last few years, the stock looks to be a good trade in the low teens, and a sell in the upper teens. I don't see any reason why that should change. That said, the company believes it has taken market share, which may now exceed 40%. The fact that handset sales grew just 4% indicates that the industry is flat. In recent months, analysts have been predicting an upturn in demand for cell phones. But that doesn't appear to be the case. 06/10/03 The Q&A has wrapped up. In sum, Nokia's sales results are disappointing. But the strong margins ensure that EPS forecasts will remain intact for the foreseeable future. Netting out those two factors, shares will likely trade in a tight range for the next several months. As I mentioned earlier, I can't envision a time when the stock will break out of the $12-$20 trading range in which it is stuck. The company will be hard-pressed to grow as competitors play catch-up. Right now, Nokia retains a lead in terms of cell phone design and image. But that can change. And it's too soon to say if the Networks division is really out of the woods. Q: In handsets, are you seeing the same -- or unchanged -- demand in the second quarter in Europe? A: The market situation is well-reflected in what we are guiding for. The overall economic situation remains challenging. Q: Can you discuss the Chinese market further? A: On a relative basis, we think we've made headway, especially in terms of distribution. But inventories in China seem to be on the high side for the overall market. Our inventories are OK. Q: ASPs are down once again, despite a higher proportion of higher-margin e-phones. What's happening there? A: I mentioned the currency implications. Looking at the underlying picture, we still think we're seeing solid progress with our new products, as we have a number of products in the top ten. : Can you comment on any traction in the CDMA market? A: What I said a few moments ago is applicable to the CDMA market. There is a substantial gain there, driven by the product introductions we have made. We have invested a lot more in CDMA in the last few years, and we expect that investment to pay off in coming years. Q: Regarding unit demand for mobile phones, can you give us more flavor? A: The overall market is up year-on-year and sequentially. In that environment, we estimate we will take market share in the 2nd quarter (which implies that ASPs are falling, as evidenced by the tepid 4% growth). We're seeing the most strength in the U.S., where we see positive developments stemming from our competitive position. Q: Could you expand upon the ASP trends you're seeing? A: They are gravely impacted by currency fluctuations. We expect them to be down on a sequential basis compared to the first quarter. In the U.S., they are up on a dollar basis. And in Europe, they are flat. But in other dollar-based markets, we're seeing more demand on the low-end, which is hurting our mix. Q: On infrastructure, sales are stronger than most expected. Has business there picked up? In other words, is this sustainable? A: It's too soon to say. In the current quarter, sales will be flat to down 5%. But we haven't seen any signs of a recovery here yet.

Anche Nokia fa dei pasticci - gzibordi  

  By: GZ on Giovedì 31 Gennaio 2002 20:52

Anche Nokia fa cose molto dubbie con le sue opzioni per i manager. Ora fa quotare le stock options dei manager in borsa per fargliele incassare subito ! Soprattutto questo indica (leggere per credere) che non ha nessuna fiducia che il suo prezzo salirà. --------------------- R. Peston su ----------------------------------- After publishing its results last week, Nokia [SE:000053994, News, Chart, Research] [US:NOK, News, Chart, Research] made a low-key announcement that it was "resolved to apply for listing of the stock options under the Nokia Stock Option Plan 2001 on the main list of the Helsinki Exchanges". It means that an executive will be able to extract value from a stock option plan, irrespective of whether Nokia's share price is above or below the subscription price under the plan (whether or not it is "in the money"). The right to buy the shares for the succeeding few years, its "time value", is worth something - and Nokia is helping its executives extract this value. Why? I asked Nokia why it is doing this. Here is what it said: "As the stock options become transferable when the share subscription period starts, a listing of the stock options on the Helsinki Exchanges creates a market place for them and offers public quotation for pricing and easy access to a trading place". So there is no ambiguity about this. Nokia wants to make it as easy as possible for Nokia executives to cash in at the earliest possible opportunity. For executives, the sums involved are substantial. The 2001 plan involves the issue of options over 145m Nokia shares. And the options vest in tranches of varying amounts between July 1 this year and December 31 2006. Example Let us look at one tranche, the so-called 2001A tranche, as an illustration. Holders of these options obtain the right to buy Nokia shares between July 1 2002 and December 31 2006. The subscription price is €36.75, which is well above the current Nokia share price of €27.20. Now under a conventional scheme of the sort that is common in the UK, these options would be worthless for the holder at the moment. The relevant executive would simply have to beaver away in order to help get the share price up before the end of December 2006, when the option lapses. It is called a long-term incentive. However, the lucky Nokia executive should soon be quids in. As of July 1 this year, he or she will be able to sell the option on the Helsinki stock exchange, probably for around €11 each (using conventional valuation methodology and assuming the share price remains around €27 and share price volatility is 60 per cent). Or to put it another way, it would only make sense for the executive to hold the option to maturity if he or she believes the share price is heading for MORE THAN €48 (the sum of the subscription price and the option premium). So the executive would have to believe the share price is going to rise 80 per cent to make it worthwhile hanging on to the option. I bet most will sell at the earliest opportunity. Short-term incentive All other things being equal, Nokia is engineering windfall profits of about €1bn from the device of listing the options. Is there anything wrong with this? Plenty. It explodes any pretence that options are about providing long-term incentives. Nokia's existing shareholders are in effect making charitable donations to Nokia's executives. I suppose these executives must be feeling terribly stressed and disoriented, following the pricking of the TMT bubble, but are they worthy of such largesse? The other point, is that the whole approach seems to me to show that the board has precious little confidence in the outlook for the Nokia price. As it happens, we have been arguing that its shares are overvalued for some time (Quest says fair value is €18.30). So if I were a shareholder, I would certainly complain to the board (if you are a UK based shareholder, your representative is Marjorie Scardino, chief executive of Pearson and non-executive member of the Nokia board). I might well sell the shares. But I would probably then apply to become