IMO: "Righting the Ship" and "Full Speed Ahead" are two separate investment thesis' for NOK.
Betting on the "righting the ship" was a no brainer given NOK's IP, strategy, and execution.
I am now more and more confident in the "Full Speed Ahead" thesis and Nokia's ability to make significant increases their top and bottom lines in '14 and '15.
They can't. That's why a leveraged buyout wouldn't work no matter how much Watsa tried.
If you did your DD on the "buyout" proposal from Watsa, you would have seen that there was no way they could have worked out the finances for an LBO given BBRY's overleveraged finances.
We're looking at a bottom of $3 or so come earnings.
4.00 would be a good jump in price if they didn't have the Hardware and Devices anchor sinking the ship.
Hardware is forecasted to be a massive black hole for the next year... the only assets worth money are their BBM & Patents.... but those two units are worthless as long as BBRY meeps burning cash on hardware.
With the devices manufacturing cancer, BBRY will likely see $2-$3. Even Nokia could not convince investors of their turn around until the entire hardware business got dumped.
I'm amazed they even answered your BBRY question.
Our local verizon shop just tells people flatly that BBRY may not be around and redirects the customers to the iPhones and Androids. There's one half working sad looking BBRY hidden in the corner with the Pantec & Huawei.
EE undergrad with CS masters. Made decent salary coding for Adobe... middle class.... by all means, not destitute or desperate, educated, and should be a decent person.
I always test employee integrity when it comes to the 2nd round/final interview. Same question as always: if our company gave you a slightly bigger under the table cash bonus annually, instead of standard W2 reported salary, would you take it.
The obvious implication is that you are an accomplice in the company cheating the IRS in tax payment.
The indian guy, with good salary, house in Palo Alto, drove a BMW to the interview, literally lunged at me when I offered the opportunity. Like this was not just normal, but he was happy to comply, for the equivalent of a little over a thousand a year more in tax sheltered.
Just a small anecdote from dozens of indian engineers I've interviewed last year ... a sense of morality or business ethics of Indians as whole is just not on par with developed nations.
Moral of the story. Only sell to India, but never set up shop inside of that cesspool of corruption. You are only offering yourself as a target to the thieves.
This bears repeating:
"...even if the royalty rate is as low #$%$ to 1%, this would drive between €450 million and €900 million in patent revenues for Nokia, which is a significant increase from its current annual royalty run rate of €500 million."
This would mean a very significant bump in non NSN revenue in 2014.
This is exactly the development that buy side analysts and Nokia bulls are looking for: significant revenue growth and aggressive monetization from their IP in the 2014 to 2015 time period.
Nokia is still very undervalued.
I prefer a tech guy over a finance guy to direct Nokia right now... Nokia's finances are (will be) fine, and Rajeev has said that he prefers to develop organic growth instead of buying just becuase they have cash (re: alu).
Nok needs technological vision + NSN is Nokia's current largest revenue generator. Rajeev deserves the job.
"Restructuring fees. Restructuring fees. Restructuring fees. "
It sounds funny, but look at ALUs books. With their labor commitments, they are stuck in an endless cycle of refinancing their debt and 'restructuring'. One day, they will have no more IP to leverage to borrow against.
"Alu is incurring losses while they have to redeem their 2.1billionUSD + interest for IP as collateral to Goldman Sachs. The redemption takes place in 2015 iirc."
This is a great example of ALU essentially leveraging any hopes of having a future so they can please the Union and French government demands in the short term.
Around the time that Goldman gets their hands on ALU's IP 2015, there is also a massive convertible debt due that will dilute any value ALU shareholders have left.
I haven't pulled the trigger yet... but the hopes of ALU turnaround is becoming very similar to the path BBRY took.
Hoping for buyouts, leveraging future convertibles for liquidity, etc. These all kick the bag down the road for someone else to hold.
The key is, when to pull the trigger on the short. Lots of delusion on ALU's chances still...
Lots of desperate ALU pumpers pleading on these boards now. Without hopes of NOK buyout, they know the trend will soon reverse.
ALU's upcoming earnings already accounts for a massive labor write off, that will now expand into the next quarters which will force ALU to seek additional liquidity.
A huge part of ALUs recovery is based on their HOPES of a Nok buyout.
Without a buyout, they are sitting on a time bomb of bad finances and poor pensions and labor commitments.
ALU in its current form will not last long before French Unions and Government bleed it dry.
Would rather not disclose how many shares I'm sitting on... I'll just say alot.
I like New Nokia's chances of continuing a steady climb for the next year as they sign more licensees, monetize their IP, and grow their Lte market share at the expense of Ericsson. Unless we hit another major market correction, I'm in no hurry to sell.
Given SAC and Cohen's current situation, they are losing withdrawals fast and need aggressive wins to drive up their yield and win back customers. IMO Cohen is looking for a quick multi baggers in a year or less.
Somebody thinks highly of New Nokia's potential in the near future...
Straight from the mouth of the next Nokia CEO.
He gives the exact answer I was looking for: he is open to acquiring tech to promote NSN growth, but sees no need to overpay and is patient enough to wait.
HELSINKI (Reuters) - Nokia's telecoms equipment unit, NSN, is focusing on expanding sales after years of concentrating on cost cutting and ditching unprofitable contracts to improve margins, its chief executive said on Wednesday.
Nokia Solutions and Networks (NSN) CEO Rajeev Suri, considered a leading candidate to head the Finnish company after it sells its loss-making handset business to Microsoft, did not rule out acquisitions to expand the business.
"It would be unwise for us not to scan the market and see what's available. Of course we'll do that," Suri said in an interview on Wednesday.
Cuts, including a drastic restructuring plan that slashed around a quarter of NSN's workforce, and the ditching of unprofitable service contracts, have helped NSN turn profitable.
The unit's improved finances and cash from the Microsoft deal are seen providing the new Nokia ammunition to go after smaller rivals. Sources told Reuters in late September that Nokia was considering buying French rival Alcatel-Lucent's wireless business.
But the 46-year old Suri also stressed that it was not always necessary to acquire weaker rivals, adding that: "We don't have to do deals for the sake of deals, just because we have money."
"I am a believer in market forces determining the outcome. I'm a believer in 'just wait.'"
Solid news for long term holders of New Nokia.
Samsung aspires Tizen to be the Android of Asia. They already have large cross promotions with the major Chinese players: Baidu, Alibaba holdings, etc. Why pre load American search engines and make money for Google when they can get paid to load Chinese search and make money for themselves.
I can see HERE becoming a CRITICAL part of Tizen in the future, and Tizen becoming a potential cash cow.
Very nice find. Wireless security will be critical and a huge growth and high margin opportunity if Nokia can get its foot in.
I'll need to dig a little deeper into Nokia's security IP... this could be a diamond ...
As long as ALU remains a french company with the french labor costs and government interference, they will never be able to re-structure their debt.
French labor union costs make ALU uncompetitive vs. the rest of the world- period.
This will not change until the Unions and French change their work ethic or ALU goes bankrupt. I'm not betting on the french unions that's for sure.