After today's trading I was compelled to try forecasting the stock again. There were both technical updates and fundamental updates to consider. And I've produced quite a run-on here. Oh well.
Closing under $4.09 is very disappointing on average trading volume. We have only had brief consolidation in this range, leaving the share price at risk. This door swings both ways depending on the market sentiment, but either way we won't be here for long. So how do we read the sentiment?
Fundamentally, today we had 2 developments. First, a possible $80M per year since 2005 tax liability. $543M would be the minimum cost incurred, add charges, penalties, operations shut down until payment, we get the picture. Just the chance it could be true was enough to even #$%$ me. Second, some initial numbers and derivitives thereof suggesting less than 4M total Lumia devices were sold in the Q4. Yes new Lumias had spot releases throughout the Q4 most not having even close to a full quarter, but I am sorry anything under 6M is a disappointment.
Let's remember those fundamental developments while we consider $4.09 again. When we last broke above, it took about a week. When we did, we did not test the last high at $4.30 before falling back under $4.09 again. The 22-day reversed into a downtrend today, first time since mid-November, the 200-day still moves lower. Those of you that have been to this rodeo before know what's coming next.
We must consider that a bearish reversal has occurred on 12/20/2012. We could confirm a bearish reversal if the stock trades under $3.60, so it is by no means confirmed at this time. But todays fundamental and technical developments have increased the potential.
Folks, if NOK loses $600M on this tax inquiry and less than 4M Lumias were sold in Q4, we WILL confirm a bearish reversal unless unrestricted cash somehow doubled. That's not to say the Q1 is not looking fantastic. But we will have to fight hard won share price battles all over again. And the media. We will be back to "show me the numbers" for the Q1.
I believe the tax liability was more concerning than the initial assessment of mobile sales. If that is the case, then Nokia being cleared should put us clearly back on the outstanding bullish continuation off the 52-week low.
January options expire a few days before the Q4 reports. If the tax liability has not been cleared, I don't believe we'll trade over $4 until at least the options clear out, and they may even try to hit the $3.50s.
So we can't stay here, and the bear is awoken today, it seems to me we will be consolidating back in the $3.80s until this issue is resolved.
The bull case was looking at $4.60s before earnings. But I am not so convinced anymore without some more information. In the bearish reversal scenario, we should expect NOK to hit its next short term high around $4.18 before failing again, but it really looks like we need to see the $3.80s before that test happens.
I know it's ugly. Let's get this tax thing cleared *immediatly*.
Respectfully disagree. I think India is not positive but its not reported for q4. You aren't mentioning the 8 ton gorilla in the room: china. Not sure why. China news could level the sentiment at any moment if nconsolidate it. China is too big a fundamental not to be mentioned and like the India news, it'll Be a q1 report deal. Regarding the 4 million lumias, that's the lowest figure check i've heard. There are many channels checks out there and this is below average. I tend to get the mean of all reports. I'm not sure there is a magic sales figures source, hence the mean which is between 8 to 11 million. Justly word. I'm not selling
Sentiment: Strong Buy
China numbers won't be a factor this quarter. The problem with the Lumia numbers is that folks have speculated the target number up to unrealistic levels. Some people have been quoting Lumia sales numbers more than 2X higher than Nokia's capacity to produce them! That's not going to help anybody. Optimism is great - even warranted. Nokia has a ton of things going for them. But a modicum of reality should be a part of any conversation. Otherwise we're just setting ourselves up for disappointment.
We won't know China for a little while beyond speculation. We could learn about tax liability next week. Whether it hits the balance sheet in what quarter doesn't matter. We'll know an upfront loss.
$600M is by itself $0.15/sh (discounted today), but have you also considered, how many devices can Nokia ship into China from their largest factory when it is shut down? If Nokia disputes a negative finding by India?
We could also find out tomorrow that Nokia has been cleared. I can't close out and miss the move back up either. But it must be considered in the forecast while it remains an open issue.
The $0.6B tax is not vital considering the cash flow Nokia have at this moment. And consider the ~$10 royalty per iPhone&Blackberry for 2013, this $0.6B tax immediately trivialized. As you have mentioned, this $0.6B tax, corresponding to $0.15/share, has already priced in today. Nokia fundamental changes little due to this tax. If only the fundamental remains unchanged, the middle-to-long term trend will remain the same.
On the other hand, market tends to over react to news, which means the worst aspect of a bad news&the best aspect of a good news will be priced in once a piece of news released, then followed by the correction. So it is safe to say, today's stock market shows the price of Nok for the WORST situation of the tax issue. We can expect the correction tomorrow or in several days. If it turns out to be not so bad, the price will move higher. Please refer to the price move of RIMM, when it lose the patent war to Nokia——more than 5% down followed by continuous up.
Personally, I take today's dip as a gift for longs——I add 1k shares and 25 April $4 Call around 4.05. I have hold my Jul $4.5 Call for more than one month, though it lose 15% of its value today, I have no worry at all because Nokia fundamental changed little due to todays news&we are sure to go back to $4.2 recently and even higher before earning release.
After earning release, we will clearly see the fundamental perspective of Nokia and it will dominate the price in short&middle term. But before that, all dips and rallies are temporary, no worries at all.
I am personally optimistic about Nokia earning for 2012Q4, and will hold my positions all the way until nokia stock price up to the moon......
Sentiment: Strong Buy
Well, we'll know more about the liability (or lack of) before we'll learn the Q4 cash flow.
Rmbo said it better above, a word that somehow eluded my whole thought: uncertainty. That word can chop at least 1/3 out of my rambling, because it is basically what I was describing.
$0.15/sh is the worst based on the known information, and was therefore a rational move today. Take another Dow -100 day tomorrow and the emotion will start playing a role.
Then there is the issue of what if what is known, is not the worst case? How many phones does that factory ship if it is shut down for 2 weeks in litigation?
thermonuke - I think that was an excellent post. I'll have to re-read it again more slowly and think about some of the technicals, etc, but I see no reason for all the "thumbs down". Thanks for the post.
Agreed. Pumping without regard for the truth is as bad as bashing as far as I'm concerned. The whole discussion above was well-reasoned and factually based for a change so thanks to all. I tend to think A Yahoo User has got the balance right - this may be a problem, as Thermonuke says, but it's likely to be just temporary. It's more and more clear that the thing that's holding down sales is availablility and that availability is a consequence of a deliberate, conservative strategy on the part of Nokia/Elop. It is not clear how quickly Nokia can ramp up production now that they've got the demand, but there's no doubt that it will happen. So these upsets are just turbulence in, as Elop says,a tide that is turning.
It is because I have forecast a possible $3.60 violation with only a $4.18 ceiling on the rebound. Make a post about share price depriciation or stalled momentum and you'll get thumbs down every time. Thanks for the feedback.
The manipulators headlined RAID! Officials stated that it was neither a raid or EVEN A SEARCH! So those thinking -.15 was about right assuming it was a raid can look forward to getting that back and more.
Secondly another down Day of -100 in the market? Well today was not -100 but closer to -50 Also China is up.
Could see a huge move up premarket or manipulation, however, by the open we will be trading higher. That is assuming no correction to the BS headlines is made. If a correction to the India headline is made we will be back to 4.25 range fast.
Sentiment: Strong Buy
The real uncertainty is how a narrow over nigh trading can abscond with so much value with out raising an eyebrow from regulators about the transparency of a " market".
What is the margin of a naked short sale? or the penalty for a concerted attack on a given security?
There's a lot of crazy talk today about Why this and Why that, and never going to get a better price. I think the Why is clear, and I'm not convinced this is the best price we'll see before earnings, unless the tax liability is cleared.