For the record, I'm long. Bought in the 4's lately. My position is small and I added it to it today.
Still, I think there are lot of dumb #$%$ people on these boards. Long and short. Some longs, in their enthusiasm, post a lot of erroneous data. And shorts, of course, are up to no good. Then there are the political loons and their rantings and ravings.
I hear no one talk about market risk at all. The market is extremely overbought. The VIX is really low. The market was down yesterday and NOK was up. Some of this loss is giving back those gains. Yes, longs want this stock to outperform the market. But you've got to be realistic as well. In the end, it all moves together.
The point I'm trying to make here is to keep that Warren Buffet dictum in mind: Don't hold a stock for 5 minutes if you're not willing if you're not willing to hold it for 5 years.
The NOK turnaround story is a long process on which Q4 will be crucial. If NOK can p#$%$ that hurdle, then the next step is to rebuild the brand and capture a larger market share. This was once the premiere cell phone company in the world. It's currently down but not out. There is no reason to believe NOK is done for, that it has no chance to pull an AAPL in the next few years.
But that process will take years. Not a few weeks or days.
I expect progress on Jan. 24th. Real progress that I believe all of the available data is pointing towards.
How the market responsds to that progress (if it is indeed there) is dependent on a number of variables.
Again, don't hold a position for 5 minutes if you're not willing to hold it for 5 years.
Buffet may be an old crackpout but he's right on that one.
Sentiment: Strong Buy
Well written and I cannot agree more. The market is on year 4, of a bull run. Some believe and argue this is just the beginning of the next 10 year bull market, but historically, that is not true. We have become accustom to the idea of a long bull market that was born from and out of the 90's. Normally you see a contraction in 4th or 5th year after run ups like what we have seen coming off 08/09. The market is overbought. My thesis has me looking more and more at European market rebound later this year. The problem is not risk as much as correlation. Stocks are currently trading had very high correlations. Historic highs. that makes it very hard to find an out performer anywhere.
Only last argument for consumer good 5 years from now, inflation, We cannot keep rates low forever so 5 years from now we will be fighting 1970's style inflation. If you are looking for a 5 year turn around, I would get away from tech.
As for Nokia, I don't see a grand future. I will have to disagree with you on their ability to turn around the company completely. They will exist in one form or another, but as of today, the industry is a few steps ahead of them. They are not a leader. I think the rebound will happen, it just may look different then many of the very exuberant longs on this board think. A rebound might not spell a stock price of more than $5 (in long run). They can sure up the business and exist competitively, but share holders will demand returns and thus Nokia will be faced with selling pieces of the business, IMO. There is a window for them to truly dominate, but I believe they will have to do it with innovation and that window is closing fast. They are simply at a disadvantage, because Goog, aapl, and msft are running the show. All Nokia can do is try to use those companies innovations and survive. That is no way to run a business. The industry is very mature and long in the tooth. You either have the cash and lean business to survive or you don't. I think they are too late and too small to make it long term. Ultimately they will sell off or spin-off parts of the company. That may mean success for some short term traders. I have nothing against short term traders, good luck to them, but I am looking to create real wealth that last, and that does not happen by day trading.
I believe we will see some solid numbers from nokia this quarter. The stock will respond very strongly to the news of their success. I also believe that bounce will die back down as quickly as it came up. Q2 will probably show a sharp drop off in sales and a sharp correction in stock price. Based on that, I will not own it for 5 day or a quarter, because I do not want to own it 5 years from now.
Enjoyed reading your post. I respect your opinion. I do agree with you on the overall market in terms of late stage bull market dynamics. However, Alcoa just beat earnings last night and raised guidance. So there you go. Nothing is written in stone.
It is in that vein that I disagree with your outlook on Nokia on at least one major point. Many of your points are salient and open-ended enough to account for changes in the future. Others not so much. For example, your statement that "Q2 will probably show a sharp drop off in sales and a sharp correction in stock price". Why? That statement is unsubstantiated and based on the notion that none of the Q4 gains (though small compared to AAPL and Samsung) can be sustained.
Look. The important questions are these:
1. Is the Lumia 920 a good phone?
- The answer at this stage is a resounding yes. It is getting strong reviews and the early signs point to decent sales. This is Nokia's second effort and it's a strong one. Is it going to revolutionize the market? No. But can it win back customers and restore it's good standing in the phone market? Yes. All of the early signs (China deal, good reviews, decent sales) point to this.
2. Does Nokia have a recognized brand in many markets? Further, are these markets growth markets?
- The answer to that question is yes. As emerging markets (India, Middle East, China) move to smartphones, it stands to reason that a number of those customers will upgrade their current Nokia dumbphones to Nokia smartphones (provided Nokia offers a good smartphone). Nokia still has a strong name and brand loyalty. There is no doubt about that. The recent China Unicom deal is a testament to that.
3. Can the company be profitable?
- All of its components (NAVteq, Siemens, patents) are making money except for the phone division. A lot of it has to do with the mistakes of the last 4 years (Symbian for example), of which Nokia has paid the price for. The Lumia 900 was the first effort and it wasn't good. Duly noted. But the Lumia 920 is a brand new start. Again, it's widely recognized as a great phone and the word is starting to get out there. Beyond this, a lot of the losses in 2011 and early 2012 were due to reorganization and the move into smartphones. That period of reorganization is now over.
The company has beaten analyst expectations the last 2 quarters and all signs point to them doing it again this quarter. A new phone with a new platform (Windows 8) is a chance at a fresh start.
4. Why does this have to be all or nothing?
- In other words, can't Nokia appreciate in price into the $10-$15 range over the next few years simply by offering a decent smartphone and gaining decent returns? Annual sales of 40 million phones in 2013 is not impossible (probably about 8 million this Q4 with the rollout) and would restore the company to profitability. There is an opportunity there to gain market share.
I just don't understand why everyone expects either NOK to jump to the top with AAPL or go straight to bankruptcy. There is a middle ground in between.
5. What exactly is innovation? Does one company have a monopoly on it?
- Back in 2000, AAPL released a glorified MP3 player called the iPod. Based on that tiny product, the company restored it's fortunes. Remember it was facing bankruptcy in 1998. Everyone said, "AAPL is done. PC's rule the world and that will never change. It's too small to innovate and take out the titans like MSFT, DELL, HP, IBM. It's a niche company that will never go mainstream."
Now look at how fortunes have changed.
If Nokia comes out with a tablet in 2013 that sells well, then it's possible that it can begin to win that brand loyalty that AAPL has. There is no doubt that Nokia still has a presence in the GLOBAL market, though for Americans it's hard to see that because Nokia is just not dominant there.
Remember it just takes one product, one game changer, to turn it all around. No one knows what company will make that game changer. Nokia has just as much of a chance as AAPL or Samsung. The strength of their patents is testament to that.
Anyway, just some thoughts on the Nokia moment of truth. We'll all know in two weeks. I have a decent position that stands to gain handsomely if Nokia can do pull this off. From a level of $4, if I'm wrong I'll take a paper loss and can wait it out. I don't believe the company will go bankrupt. And I do believe it has enough value for a buyout should things not improve substantially.
In short, the risk-reward model tilts towards the positive IMHO.
There is absolutely no way to make real money in the stock market without taking some good old-fashioned calculated risks. I'm sure those who invested in AAPL at $5-8 back in 1998-1999 would agree.
Sentiment: Strong Buy
You will be correct, in case NOK will NOT be good enough to take out RIMM. There I see the real chance for NOK to be back to (almost) old glory, by replacing RIMM in the corporate market. NOK will not be able to survive in the low-cost arena only, but this market is good to be the door-opener.
The number of shorts that have been in this stock oveer the past year or two says it all.
They have connecctions with the Main Stream Media and any chance to spin an event negatively, will be taken.
I go by what see happening with the company, and their prospects look excellent!
Sentiment: Strong Buy