my understanding is they can do the following:
1. set terms of the merger, requiring Nokia to commit to some sort of patent policy or pricing
2. try to block the merger by officially preventing transfer of any Chinese based assets
3. set limits of MSFT ability to sell into chineese markets if xyz demands are not met
so they can't actually prevent the merger, but they can be very very difficult. When NSN bought Motorola assets a couple years ago, the Chinese authorities delayed it by 6-9 months. What's going on is ZTE, Huawei, Lenovo et al are trying to negotiate a patent pricing deal as condition of the merger. In addition i'm sure there's some payback for the US kicking Huawei out of the US networking business, since this involves MSFT, a major US company.
its blackmail plain and simple. Nokia may be in a tough spot in terms of retaining the ability to go after these Chinese oem's patent infringement.
China's MOFCOM appears to have stopped several acquisitions of Chinese assets or Chinese firms on the grounds of anti-competitive risks, and set conditions on a number of deals. they want to steal IP and they don't want to pay. pretty simple
that pretty much tells you how to trade it.
stock had a helluva run... might buy some at $3 for the bounce. neuvax has potential, but there are too many retailers stuck in margin accounts with spec longs bought over $4.
marked sold off for a few weeks 1,000 pts on the Dow, then rallied to NEW HIGHS, before trading in a range for a while, then falling 2,000 points, only to rally another 4,000 points from the lows...
great trading environment, but also very very dangerous to trade that.
Looks like alot of margin calls hit this morning... nok holding up well. But for the moment shorts have path of least resistance. Retail has too much margin which can force market a bit lower.
1700 is not out of question so keep some powder dry : )
they did two smart things
1. bought rest of NSN for half its asset value
2. sold phones for 5x its asset value
that's pretty damn good for 1 year!
in addition they kept all their patents. if they hire the right CEO that guy will monetize those aggressively and create a recurring revenue stream of $1billion for patents and $1.3 billion in telecom networking, then sell navteq for 3-5x its current carrying value. put a 12x multiple on all that plus the cash and you get about $41billion valuation or $10.90 a share in a 2 year window or 25% annual return.
I'll take that bet.
the Europe guidance is good for Nokia and ALU as it confirms what analysts expect in terms of a ramp in telecom spending picking up this year. Vodafone expansion of buildout of 4g starting Q2.
if you don't invest in value as well as dividends and reinvest those dividends you will miss 40% of the long term value creation of equities. proven fact. the only traders who make money either have inside info or are simply filling paper for a broker for a fee.
no one ever got rich on wall street taking actual risk.
i'm reasonably sure the individual known as 'momo' actually works a night shift on the Pennsylvania turnpike as a toll booth operator.... 80% sure
just remember the whole point of wall street is to create a mechanism whereby the retail investor can be persuaded to send their after tax earnings to new York and convert them to intangible paper "assets" with subordinate rights to a company, created out of thin air by banks.... keep that in mind and you'll be fine. The fed is here to make the world safe for those banks
no idea if the EM vol has further to go, but under $7.00 is a decent spot to play a swing trade back to $7.60 - $7.75 as long as you have some patience and willing to add at lower prices down to $6.50
same catalysts will move the stock to close the gap...
Deal Close (china approval, other approvals)
Cash return / debt reductions
Ratings agency debt upgrades
Telecom upgrade cycle in Europe
European economic stability
Timo et al may have taken off the table some of the value creation upside by signaling a capex reinvestment strategy into the Navteq business, which probably hurts valuation, but the other catalysts are intact. We can see from Samsung's recent settlements they do desire to spend real dollars to resolve patent disputes. This may be a 2014 surprise if they decide to settle. Timo (idiot) has certainly set the bar of expectations quite low now, which probably sets the shares up for Q2 upside, but pushes out the immediate gratification.
he will say sell at $6.50... then buy at $7.50 of course its all in his 'charitable trust' ... the primary charity being mr Cramer's silly website
GALE $2 $7.50 $5 in like 3 months... if you like adventure and heartburn these things are both
ARIA $20 $2.25 $9.50 in 4 months
then there's garbage like ARNA etc.. this stuff is out of hand.
makes Nokia look like a fat lady in a bikini... then again you know she's not running off in any particular direction... something to be said for that!
too bad Timo is an incompetent spokesman... but I guess that's part of what you get with this bird
• European growth risks skewed to the upside – Both consumer confidence and the composite PMI posted strong gains in January to their highest levels since mid - 2011. The improvement was broad - based across countries and sectors. Notably, the Spanish PMI suggests growth could be 2% in the first half of this year, double our current forecast. Even as growth risks are tilting to the upside, inflation risks remain tilted to the downside.
Eurozone recovery remains our preferred theme, we think the latest EM volatility will not derail the positive developments there
Eric gets 650 one time plus ongoing. Nok gets 600 each year. But this allows analyst to quantify the eventual settlement.
This EM crisis is really unfortunate timing. Its a real issue. Will prob have to have emergency central bank interventions again. Decent trade opp though as profit takers and margin calls kick in to buy for a move back to 7.60
They did a poor job of outlining direction, but I disagree on the conclusion. I think they have set asequential series of decisions. 1. Deal close 2. Ceo 3. Strategy outline 4. Capital return/ debt reduction
They clearly have some regulatory challenges around their goal or patent revs... I think they felt they needed to downplay the opportunity there.
But if you listen to the call they did not give any guidance beyond deal close. So there is actually a nice trade opp here coming when the emerging markets stuff calms down.
2015 price target $10.80
Lowering 2014 earnings and margin estimates noting loss of some blackberry patent revenue but upside to ipr from Htc cases.
Notes that based on a 10% margin rate for NSN that business should trade at 1x sales ...
Notes that at current valuation no upside at all is priced in for either IPR or Here.. Investors getting patents business for free with huge upside.