|Bid||N/A x N/A|
|Ask||N/A x N/A|
|Day's Range||3.9590 - 3.9820|
|52 Week Range||3.0245 - 5.6200|
|Beta (5Y Monthly)||-0.01|
|PE Ratio (TTM)||3,975.00|
|Forward Dividend & Yield||0.10 (2.49%)|
|Ex-Dividend Date||Feb 03, 2020|
|1y Target Est||N/A|
Nokia (NYSE:NOK) just reported solid results for its fourth quarter on Feb. 6. The Finnish telecom equipment and software maker produced 1.357 billion EUR in free cash flow. This drove its net cash balance up to 1.73 billion on Dec. 31, 2019. NOK stock is up over 6% since earnings.Source: RistoH / Shutterstock.com It is now much more likely that Nokia will be able to restore its regular dividend payments. As I pointed out in my article on Dec. 30, "free cash flow is the key to the future of Nokia." Free Cash Flow Growth Will Lead to Dividend PaymentsLast quarter, management warned that unless it cut out the dividend it would not be able to raise its cash balance. It said then that once the cash balance hit 2 billion EUR, it would restore the dividend.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 7 Exciting Stocks to Buy for Aggressive Investors With this latest earnings release, management was even more clear, now that free cash flow is growing again. Here is what they said:"As we noted in our third quarter announcement, our Board said it expects to resume dividend distributions after Nokia's net cash position increases to approximately EUR 2 billion.Given typical cash seasonality, we would not expect to reach that level in the first three quarters of this year.Should we exceed the EUR 2 billion level after that point, the Board will assess the possibility of proposing a dividend distribution for financial year 2020. "So management is now predicting that by the end of 2020, if free cash flow continues to raise the cash balance above 2 billion EUR, it would "assess" paying a dividend. Since net cash is already at 1.4 billion EUR, it seems highly likely that the 2 billion EUR level will be reached this year.For example, despite the huge increase in free cash flow during Q4, its full-year 2019 FCF was negative 257 million EUR. So if the company can continue to make strides like in Q4, it should reach its net cash goal sooner than later. Nokia's 5G Win Rate Is IncreasingNokia reported that it won 18 more 5G deals in Q 2019. For example, at the end of Q3 it had signed 48 networks to use their 5G systems, with 15 that were already live. As of Q4, that figure had risen to 66 deals, with 19 live networks.As I wrote in my last article, Nokia is battling hard against Swedish 5G maker Ericsson (NASDAQ:ERIC) and Huawei from China. Price cutting, incentives along with technology/software competition has been fierce.Nokia now says, "At the end of the fourth quarter 2019, our 5G win rate was over 100% outside of China and in the mid 90% range including China, reflecting strong performance."Moreover, its super-efficient 5G Powered By ReefShark, a system-on-a-chip 5G design, was 10% of its 5G shipments in Q4. It expects to have that ratio reach 35% by the end of 2020 and 70% by 2021 year-end. This chip will deliver margin improvements for Nokia as well as performance advantages.Nevertheless, according to the Wall Street Journal, Nokia is going to be hit hard by the coronavirus impact on its supply chain in China. Nokia did not quantify that yet in its conference call. Nokia has thousands of research-and-development employees in China. Nokia Is Still CheapRight now NOK stock trades for just 16.4 times its 2020 earnings expectations by Seeking Alpha analysts. Nokia has a nearly $25 billion USD market value, so its FCF yield is high.For example, last year's FCF of 1.357 billion EUR equates to an FCF yield of 5.90%. (This is calculated as follows: $1.0878 FX rate times $1.357 billion, all divided by $25 billion = 0 .059.) That is an attractive valuation, especially if free cash flow continues to grow this year, as Nokia expects it will.Moreover, possibly with some tongue in cheek, the U.S. attorney, William Barr, suggested this week that the U.S. government should consider taking a controlling stake in Nokia. The U.S. is intent on preventing China's Huawei group from gaining inroads in the 5G telecom market.That helped push up NOK stock. It probably didn't hurt that Barr himself was the former general counsel for Verizon Communications (NYSE:VZ). So far no one is quite sure if he was serious. It is not uncommon for governments to take controlling stakes in telecom operators, but focusing on telecom gear makers is less common. What Should Investors Do With NOK Stock?So far it seems pretty clear that Nokia's board is not going to make a decision about paying a dividend until the end of 2020. But if Nokia produces solid earnings, free cash flow, and net cash balance rise, watch out.NOK stock will likely rise in anticipation of the resumption in dividend payments if that occurs. So at some point, investors will have to decide if Nokia is cheap enough as it stands if they want to benefit.As of this writing, Mark Hake, CFA does not hold a position in any of the aforementioned securities. Mark Hake runs the Total Yield Value Guide which you can review here. The Guide focuses on high total yield value stocks. Subscribers receive a two-week free trial. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Exciting Stocks to Buy for Aggressive Investors * 20 Stocks to Buy From the Law of Accelerating Returns * 7 U.S. Stocks to Buy on Coronavirus Weakness The post Nokia's Free Cash Flow Growth Raises the Prospects for a 2020 Dividend appeared first on InvestorPlace.
The phenomenal growth of Apple (NASDAQ:AAPL) has largely been driven by one product: the iPhone. For as long as many investors can remember, the iPhone has defined Apple. However, it's 2020 and the iPhone's days of being the primary driver of Apple stock value are over. 2007 to 2017: The iPhone Lit a Rocket Under Apple Source: Shutterstock Prior to the launch of its smartphone, Apple was on a roll. In the late 90s, Steve Jobs returned to once again become the company's CEO. That was followed by the launch of the iMac and then the wildly successful iPod. By the start of 2007, Apple dropped the "Computer" from its name to reflect the fact that with the iPod it had increasingly become a consumer electronics company, not just a PC maker with a side business.That summer, the company released its true game-changer, the iPhone.InvestorPlace - Stock Market News, Stock Advice & Trading TipsSales of the smartphone exploded and so did the value of Apple's shares. The iPhone destroyed previous leaders of the mobile device like BlackBerry (NASDAQ:BB) and Nokia (NYSE:NOK). When the company celebrated the tenth anniversary of the iPhone in June, 2017, Apple stock had increased in value by 1112% since the iPhone was first announced. In comparison, the S&P 500 had increased by 60% over the same decade. Since then, AAPL has gone from $144.73 to $324.60 for an additional 124% gain. That includes the recovery from a massive drop in the fourth quarter of 2018. Apple stock dropped 34% in just three months amid signs that the global smartphone market was in decline, and Apple announced that it would no longer report iPhone unit sales. If the Era of iPhone Growth Is Over, What Will Drive Apple Stock Going Forward?The iPhone still accounts for over half of AAPL's revenue, but the days of record launch weekends causing wild rallies of Apple's shares are clearly over. So what will come next? * 7 Exciting Stocks to Buy for Aggressive Investors In an email to InvestorPlace, Jack Choros, content manager for SophisticatedInvestor, laid out his thoughts on Apple:"Apple stock is up over 100% over the last year. Contrast that with the fact the S&P 500 is up just 25% and investors who bet on the stock are winning big. Once the fear over coronavirus calms down in 2020 and the broader stock market bounces back, Apple stock will rise and fall based on its non-iPhone related businesses such as the revenue generated by wearables like the Apple Watch and their service business. The iPhone is the King of mobile technology. Apple's future growth depends on other businesses." The revenue of the company's services and wearable products are both growing quickly, and they are a potent combo. Wearables -- the Apple Watch, AirPods and Beats headphones -- bring in the big hardware dollars. Services, including Apple Music, Apple TV+ and Apple Arcade, bring in recurring revenue through monthly subscriptions.Both also lift iPhone sales. In turn, iPhone buyers are more likely to buy one of Apple's wearables or subscribe to one of its services. That "halo" effect is real, and AAPL leverages it to great effect. The Bottom Line on Apple StockIf you have doubts that wearables and services have the potential to significantly move the needle for Apple in 2020, there are some numbers that might help to make the case. In the fiscal first quarter of 2020, those two divisions brought in a combined $22.7 billion of revenue. That's a 24.7% year-over-year increase from the $18.2 billion they brought during the same period a year earlier. An estimated 30.7 million units of Apple Watch were shipped in 2019, outselling the entire Swiss watch industry in 2019. Sales of Apple's AirPods wireless earbuds nearly doubled in 2019 (to the tune of an estimated $6 billion) and dominate the category. AppleInsider ran a report last year making the case that if AirPods was an independent company, it would have a $175 billion valuation. Services has huge growth potential as well. For example, at last count Apple Music had 60 million subscribers. While the company does offer student and family discounts, at the base subscription rate of $9.99 that service alone could be worth $600 million per month in revenue or $7.2 billion annually.With over 1.4 billion active Apple devices, the company has a huge user base to sell its growing stable of services to. And it has the ability to install apps on every one of those 1.4 billion devices when they are purchased or run a system update.Apple stock is up 10% so far in 2020. Look for continued growth this year, but with wearables and services increasingly doing the heavy lifting instead of the iPhone.As of this writing, Brad Moon did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Exciting Stocks to Buy for Aggressive Investors * 20 Stocks to Buy From the Law of Accelerating Returns * 7 U.S. Stocks to Buy on Coronavirus Weakness The post The iPhoneas Days as the Driver of Apple Stock Are Numbered appeared first on InvestorPlace.
T-Mobile (TMUS)-Sprint (S) merger approval will likely pave the way for faster 5G rollout across the country. Qualcomm (QCOM) reports solid first-quarter fiscal 2020 results driven by 5G chip strength.
(Bloomberg) -- The wireless industry scrapped its biggest annual showcase after the coronavirus outbreak sparked an exodus of participants, roiling telecom companies just as they’re preparing to roll out new 5G services.It’s the first time in MWC Barcelona’s 33-year history that organizers have called off the event, which draws more than 100,000 participants from across the world to check out the latest innovations, pitch to investors and do deals.“The global concern regarding the coronavirus outbreak, travel concern and other circumstances, make it impossible” to hold the event, John Hoffman, chief executive officer of conference organizer GSMA, said in a statement to Bloomberg News.The list of big-name attendees started to crumble on Feb. 7, when Swedish wireless equipment maker Ericsson AB pulled out, saying it couldn’t ensure the safety of staff and customers. As others pulled the plug -- from Sony Corp. to Nokia Oyj, Vodafone Group Plc and Deutsche Telekom AG -- it became harder for those remaining to justify their presence.Bloomberg News reported earlier that GSMA could announce the cancellation as soon as Wednesday, after a meeting of members. As of Tuesday, the death toll in China from the virus rose to 1,113, and confirmed cases on the mainland have reached 44,653.MWC was due to run from Feb. 24 to Feb. 27. GSMA had stepped up sanitary precautions to reassure visitors -- advising against handshakes, introducing body temperature scanners and a protocol for changing microphones, and restricting entry to recent arrivals from China. Some delegations had replaced Chinese staff with colleagues from other countries or sent their China representatives ahead of time to avoid being barred.Who’ll Pay?Every year, telecom heavyweights use MWC and the oceans of publicity that come with it to generate marketing buzz around their latest wares. A big focus this year was going to be fifth-generation mobile services, and now several companies will need to reschedule launch events. Chipmaking giant Intel had planned to announce products for 5G networks and will hold an unveiling another time, according to a person familiar with its plans. Motorola was gearing up to showcase new 5G phones.The smartphone industry is trying to fire up stalled growth with the promise of higher data speeds and faster responsiveness. Smartphone shipments have been declining since 2016.The decision to scrap MWC entirely was a difficult one, and it’s not clear who will shoulder the costs -- the participants or GSMA. The industry’s biggest players often spend tens of millions of dollars to exhibit at the show. Ericsson’s absence alone left a gap bigger than a standard American football field in the conference halls.GSMA funds much of its budget from the event, charging 799 euros ($872) for a basic admissions pass.BarcelonaMWC is also important to the city of Barcelona, Spain’s second-largest city, as well as to many of the smaller companies that wouldn’t otherwise have access to such a large audience of mobile carriers and consumers. Large national contingents from Turkey to South Korea take to the show to encourage deal-making and inward investment.The regional government of Catalonia had been in touch with the conference organizers and said it saw no need to cancel events like MWC, Alba Verges, head of the Catalan government health department, said at a press conference in Barcelona.South Korea’s LG Electronics Inc. was among the first to rethink its participation, pointing out last week that most health experts had advised against “needlessly” exposing hundreds of employees to international travel.The global spread of the coronavirus has decimated other conferences, like Singapore’s annual airshow, which lost scores of corporate attendees but went ahead as planned on a smaller scale. Formula One confirmed it is postponing this year’s Chinese Grand Prix racing event due to the coronavirus outbreak, the Liberty Media Corp.-owned firm said in a Twitter post on Wednesday.(Updates with information on abandoned product launches by Intel and Motorola in seventh paragraph.)\--With assistance from Thomas Seal, Niveditha Ravi, Saritha Rai, Debby Wu, Ian King, Gao Yuan, Mark Gurman, Scott Moritz, Rodrigo Orihuela, Angelina Rascouet and Loni Prinsloo.To contact the reporter on this story: Nate Lanxon in London at firstname.lastname@example.orgTo contact the editors responsible for this story: Tom Giles at email@example.com, Rob GolumFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- After some of the biggest telecom companies withdrew from the wireless industry’s top annual event because of concerns about the spread of the coronavirus, MWC Barcelona 2020 is all but dead.Members of the organizer, the GSMA, headed into a meeting on Wednesday expecting to announce a decision to cancel the conference in the afternoon, according to people familiar with the matter. However, the group based in London has been unable to arrive quickly at a conclusion on what to do.While many members of the lobby group publicly said they would withdraw, the organization’s base is broad and global. It’s not clear who would carry the costs of choosing not to go ahead. The Catalonian health authority said Wednesday it saw no need for such an event to be canceled.Spanish radio station Cadena Ser reported that GSMA has decided to continue preparations for MWC at least until Friday while it monitors the evolution of the virus.Two of the world’s biggest phone carriers -- Deutsche Telekom AG and Vodafone Group Plc -- earlier on Wednesday joined major exhibitors such as Nokia Oyj, Ericsson AB and Sony Corp. in pulling out of MWC. Ericsson’s absence alone left a gap bigger than a standard American football field in the conference halls.A decision to abandon the gathering for the first time in its 33-year history would underscore how the continued spread of the virus from its origin in China is denting business activity around the world. The death toll in China rose to 1,113 as of Feb. 11, and confirmed cases on the mainland have reached 44,653.Liberty Media Corp.’s Formula One on Wednesday postponed the Chinese Grand Prix, due to be held in April. Scores of companies and VIPs have pulled out of the Singapore Airshow, the industry’s biggest in Asia, scheduled for this week.MWC is due to run from Feb. 24 to Feb. 27, drawing around 100,000 people to the Spanish city. It’s the industry’s most important opportunity for networking and a chance to show off the latest gadgets and software to buyers from across the world. Wireless equipment vendors use MWC to hammer out deals with their biggest customers. Were the event to go ahead, it would be a shadow of its former self.5G ShowcaseThe GSMA stepped up sanitary precautions in recent days to reassure visitors -- advising against handshakes, introducing body temperature scanners and a protocol for changing microphones, and restricting entry to recent arrivals from China.That’s not been enough to reassure many participants given the potential for virus transmission at an event where thousands of visitors jostle through packed exhibition halls and huddle in meeting rooms.In a statement to Bloomberg, the GSMA said Wednesday it was meeting regularly with health experts and partners “to ensure the wellbeing of attendees,” and will continue to seek medical advice on a frequent basis. A representative for the industry body declined to comment further.The biggest MWC participants often spend tens of millions of dollars to exhibit at the show. The GSMA funds much of its budget from the event, charging 799 euros ($872) for a basic admissions pass.This year is supposed to see the big launch for fifth-generation mobile services that debuted in 2019. The smartphone industry is trying to fire up stalled growth with the promise of higher data speeds and faster responsiveness. Smartphone shipments have been declining since 2016.MWC is also important to the city of Barcelona, as well as to many of the smaller companies that wouldn’t otherwise have access to such a large audience of mobile carriers and consumers. Large national contingents from Turkey to South Korea take to the show to encourage deal-making and inward investment.\--With assistance from Stefan Nicola, Angelina Rascouet, Daniele Lepido, Thomas Gualtieri, Nate Lanxon and Charles Penty.To contact the reporters on this story: Loni Prinsloo in Johannesburg at firstname.lastname@example.org;Thomas Seal in London at email@example.com;Rodrigo Orihuela in Madrid at firstname.lastname@example.orgTo contact the editors responsible for this story: Rebecca Penty at email@example.com, Jennifer RyanFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
The future of this year’s edition of Mobile World Congress is seriously in doubt, as more companies cancel their participation out of concerns about the spread of the coronavirus.
(Bloomberg Opinion) -- It might be the first workplace tip I was ever given: Always propose a solution when pointing out a problem.The U.S. seems finally to have taken the adage to heart for its approach to China’s Huawei Technologies Co. Attorney General William Barr suggested on Friday that the U.S., either directly or in a consortium with private American or “allied” companies, consider taking a controlling stake in Huawei’s biggest telecommunications-equipment rivals: the European companies Ericsson AB and Nokia Oyj.Sure, the proposed solution might be ill-considered — in this context there is such a thing as a bad idea — but let’s keep things upbeat and try to find a way to make it workable. Where there’s a will, there’s a way, and all that.Having a positive cross-Atlantic proposal on the table is a refreshing change from the U.S.’s general tone over the past 14 months, characterized as it has been by sniping and threats toward nations considering Huawei kit for the fifth-generation mobile networks that are crucial to making the Internet of Things a reality. (As early as 2009, the U.S. found so-called “back doors” in Huawei’s mobile-phone networks and has been telling allies such as the U.K. and Germany about them since late last year, the Wall Street Journal reported on Tuesday.)The U.K., which has been actively managing the role of Huawei’s gear in its network for a decade, has plowed ahead irrespective, albeit with some important checks and balances which seem a sensible way of limiting malicious actors’ access. As Barr himself said on Friday, “It's all very well to tell our friends and allies that they shouldn't install Huawei, but whose infrastructure are they going to install?”QuicktakeHow Huawei Landed at the Center of Global Tech TussleThe proposal was welcomed by some, not least by Cevian Capital AB, the activist fund that’s Stockholm-based Ericsson’s biggest shareholder. No surprise there. Takeover talk helps a share price, and both Ericsson and Helsinki-based Nokia have been among the five worst-performing stocks in the MSCI World Information Technology Index in the past decade.To find a workable solution, a good place to start is to identify the problem. Barr stated it thus: The question is whether, within this window, the United States and our allies can mount sufficient competition to Huawei to retain and capture enough market share to sustain the kind of long-term and robust competitive position necessary to avoid surrendering dominance to the Chinese.That makes it seem like a question of capital. But if cash is what Nokia and Ericsson need, the solution is not simply to acquire them. Were Ericsson to become the target, the buyers would likely need to spend $40 billion on the deal — money that would go straight into the pockets of existing investors before a cent was injected into the firm’s operations. That seems a shoddy allocation of taxpayers’ money. If equity was indeed the means by which to invest, then perhaps a capital increase would be the best option? But for shareholders to stomach the sort of dilution involved, there would have to be a clear way for the firm to benefit from the proceeds and translate them into more value.QuicktakeThe 70-Year-Old Spy Alliance the U.S. Says It May Cut OffWhy would either firm need the capital? Their disadvantage to Huawei in recent years has been their inability, first, to invest in research and development at the same pace, and second, to see their customers’ network costs subsidized with generous financing offers. Huawei has benefited from as much as $75 billion in state-backed financial assistance over the years, the Wall Street Journal reported in December. That helped it charge about 30% less than rivals for its gear. It’s all very well seeking a market-based solution, but China has been leaning on the scales.Being undercut by Huawei has made it harder for Nokia and Ericsson to foot the massive R&D expense that’s needed while they’re having to compete more viciously on price. That’s left them lagging in key technologies related to 5G such as network slicing, a much sought-after technique that will let carriers allocate their capacity more efficiently. Catching up could cost each firm $5 billion, a significant sum similar to what they’re each already spending annually, which already represents an eye-watering 20% of sales. The companies probably have three years before carriers start seeking such capabilities with gusto.The best approach from the U.S. would therefore be to help with both those costs and customer financing. Investing in R&D would have the corollary benefit of creating well-paying American jobs, adding to the combined 24,000 people that the two Nordic companies already employ in North America.Interestingly, on the financing side, the U.S. already has just the mechanism in place — with the U.S. International Development Finance Corporation, which will have a budget of $60 billion to help developing countries and businesses purchase equipment. The agency’s chief has intimated it plans to help counteract Huawei. It started operations in December. Ensuring it has the necessary budget scope also to help firms in developed economies will be essential.Barr’s suggestion may not be a practical one — Larry Kudlow, an adviser to President Donald Trump, acknowledged as much by saying that the U.S. would not be buying either firm — but hopefully it signals a change in American thinking that could lead to workable solutions.To contact the author of this story: Alex Webb at firstname.lastname@example.orgTo contact the editor responsible for this story: Melissa Pozsgay at email@example.comThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Alex Webb is a Bloomberg Opinion columnist covering Europe's technology, media and communications industries. He previously covered Apple and other technology companies for Bloomberg News in San Francisco.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
More big names are stepping Mobile World Congress, the world's biggest phone and telecom trade fair, prompting the organizers to urgently decide what they wish to do going forward. Nokia, one of the omnipresent firms at major tech trade conferences, won't be attending this year's Mobile World Congress. Electronics giant HMD, which sells smartphones under Nokia brand, cited similar reasoning for its withdrawal, too.
When it comes to 5G opportunities, Telefonaktiebolaget LM Ericsson (NASDAQ:ERIC) seems almost forgotten. Bulls have pressed the 5G-based case for Qualcomm (NASDAQ:QCOM) for years now. Nokia (NYSE:NOK) has drawn the attention of value investors. China's Huawei has been the subject of media coverage and political uncertainty. Ericsson stock, in contrast, draws seemingly little notice.Source: Shutterstock Despite the lack of interest -- or perhaps because of it -- ERIC stock might have the most appealing case for 5G bulls. Valuation is reasonable. A multi-year turnaround offers scope for improvement and already has borne fruit. Early returns in the 5G race also suggest room for optimism.There are reasons for caution. Political pressure on Huawei hasn't been the catalyst for either Nokia or Ericsson that some hoped. Ericsson stock has been an awful multi-year investment. Shares have dropped 13% over the past decade, while the NASDAQ Composite has more than quadrupled. Somewhat incredibly, ERIC's performance actually is negative over the last quarter century (though, to be fair, investors would have generated positive returns including dividends).InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 7 U.S. Stocks to Buy on Coronavirus Weakness So this is a bit of a "this time is different" case, which always is risky. But it's certainly an intriguing "this time is different" case. The Ericsson TurnaroundOne pillar of the case for Ericsson stock is that the company qualitatively has plenty of room for improvement. By the company's own admission, Ericsson's culture turned toxic in the past. In December, the company agreed to over $1 billion in fines payable to the U.S. Department of Justice and the U.S. Securities and Exchange Commission. The DOJ noted that the company's conduct "involved high-level executives and spanned 17 years and at least five countries."Ericsson said months earlier, at its Investor Update, that its own investigations had uncovered additional ethical and legal breaches. And so the company is working aggressively to improve its culture and its compliance competencies.Those efforts go beyond simply avoiding criminal or dubious activity. Ericsson has simplified its operating structure and taken out roughly $1 billion in costs, while reinvesting some of those savings in much-needed research and development. It has exited lower-margin contracts.This simply looks like it should be a better company going forward. And the efforts already have helped the company's results. The Numbers ImproveEricsson's results have steadily improved of late. Gross margin dipped below 30% in the last three quarters of 2017. Excluding restructuring charges, the figure climbed to 37.5% for full-year 2019.That expansion helped drive a strong improvement in operating profit, which excluding one-time costs (including the U.S. fines) more than doubled last year. Ericsson sees more room for growth ahead, with the company targeting 12-14% margins in 2022 against an adjusted 9.7% in 2019.That expansion alone would drive earnings up at least 25% from current levels. Sales growth should continue as well. After 4% constant-currency organic growth in 2019, the midpoint of 2020 targets suggests an increase over 3% in reported sales.If 5G can accelerate that top-line growth, Ericsson's fundamentals can become attractive in a hurry. Excluding the U.S. fines, 2019 free cash flow neared $1.8 billion, or about 54 cents per share. Excluding $1 per share in net cash on the balance sheet, ERIC is trading at less than 15x free cash flow based on 2019 numbers. If margins expand and sales grow, that multiple either has to dip into the single-digits or, as would be more likely, ERIC stock has to rally. 5G and the Case for Ericsson StockTo be sure, that case rests on Ericsson taking solid share in 5G from Nokia and Huawei. The news there admittedly remains somewhat mixed.Despite U.S. pressure, Huawei still is driving sales in Western countries. For instance, German lawmakers have pushed to ban the Chinese supplier from their country's telecommunications network. Yet Huawei, along with Nokia, still scored a big win with Telefonica Deutschland (OTCMKTS:TELDF).Nokia remains a formidable competitor. At least some of what 5G deployments Ericsson has won have come through lower upfront pricing, as Bloomberg has reported. And the race for 5G wins is only in the early stages. It's possible the pressure on Huawei could be eased through a broader U.S.-China trade deal or a new presidential administration in 2021.Meanwhile, Nokia has a turnaround strategy of its own, and a reasonable valuation if its own targets are hit. (The fact that the company already has pulled down 2020 guidance, however, impacts that company's credibility.) Cisco Systems (NASDAQ:CSCO) has pulled back and has 5G exposure. Investors even could look to telecommunications providers AT&T (NYSE:T), Verizon Communications (NYSE:VZ), or even China Mobile (NYSE:CHL).Even out of the group, though, Ericsson stock has a sneakily attractive case. The giants in the space don't have the same turnaround benefits on the way. Nokia's credibility seems too damaged. It's Ericsson that might have the most attractive case in 5G, and if the company delivers on its promise, Ericsson won't seem undercovered for too much longer.As of this writing, Vince Martin has no positions in any securities mentioned. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 U.S. Stocks to Buy on Coronavirus Weakness * 7 Strong Value Stocks to Buy for 2020 * Are All the Top 10 Warren Buffett Stocks Worth a Buy? The post Why Ericsson Stock Might Be the Best 5G Play appeared first on InvestorPlace.
(Bloomberg) -- Sign up for Next China, a weekly email on where the nation stands now and where it's going next.The Department of Justice announced charges Monday against four members of China’s People’s Liberation Army for the 2017 hack of Equifax Inc., a breach that exposed the personal information of about 145 million Americans.The announcement by Attorney General William Barr follows an indictment in Atlanta accusing the Chinese military personnel of conspiring with each other to hack into Equifax’s network and stealing sensitive data on nearly half of all U.S. citizens.“This was a deliberate and sweeping intrusion into the private information of the American people,” Barr said in a statement. “Today, we hold PLA hackers accountable for their criminal actions, and we remind the Chinese government that we have the capability to remove the internet’s cloak of anonymity and find the hackers that nation repeatedly deploys against us.”Wu Zhiyong, Wang Qian, Xu Ke and Liu Lei, who were members of the PLA’s 54th Research Institute, were charged with three counts of conspiracy to commit computer fraud, conspiracy to commit economic espionage and conspiracy to commit wire fraud, authorities said.They were also charged with two counts of unauthorized access and intentional damage to a protected computer, one count of economic espionage and three counts of wire fraud, according to the Justice Department. Chinese officials disputed the accusations. “The Chinese government, military and relevant personnel never engage in cyber theft of trade secrets,” China’s foreign ministry spokesman Geng Shuang said on Tuesday.In an interview with Bloomberg News, Equifax Chief Executive Officer Mark Begor said that “having China indicted for this really changes the stakes for all of us.”“It definitely raises the bar for all of us on what we need to do to defend the sensitive data that we have,” he said. “We’re in the middle of a very significant technology and security investment because we’re convinced that these attacks are going to continue. And they’re going to be more difficult to defend, and we want to make sure we’re positioned so that this doesn’t happen again to Equifax.”The defendants allegedly exploited a vulnerability in the Apache Struts Web Framework software used by Equifax’s online dispute portal. They used the access to obtain login credentials that could be used to further navigate Equifax’s network and spent weeks running queries to identify the company’s database structure and searching for personal information, according to the Justice Department.The hackers ultimately stored the information in temporary output files, compressed and divided the files and downloaded and exfiltrated the data to computers outside the U.S., according to the Justice Department.“In total, the attackers ran approximately 9,000 queries on Equifax’s system, obtaining names, birth dates and social security numbers for nearly half of all American citizens,” according to a statement from the Justice Department.‘Over the Top’The hackers took steps to evade detection, too, routing traffic through about 34 servers in nearly 20 countries to mask their origin and using encrypted communication channels within Equifax’s network to blend in with normal network activity, authorities aid.“Chinese spying is over the top increasingly dangerous,” said Jim Lewis, a senior vice president and director of the Technology Policy Program at the Center for Strategic and International Studies in Washington. “The PLA has more personal data on Americans than anyone else.”It’s the second time in a week that Barr has raised criticism of China’s behavior on technology issues. Last week he gave a speech warning of the threats he said are posed by Chinese technology, focusing on Huawei Technologies Co.’s 5G networks, and saying the U.S. should consider investing in competitors Nokia Oyj and Ericsson AB.“Unfortunately, the Equifax hack fits a disturbing and unacceptable pattern of state-sponsored computer intrusions and thefts by China and its citizens that have targeted personally identifiable information, trade secrets, and other confidential information,” he said.Equifax announced in September 2017 that hackers accessed data including Social Security numbers, driver’s license numbers and addresses.Hackers gained access to the Equifax network in May 2017 and attacked the company for 76 days, according to a House Oversight Committee report. Equifax noticed “red flags” in late July, and then in early August contacted the Federal Bureau of Investigation, outside counsel and cybersecurity firm Mandiant. The company waited until that September to inform the public of the breach.The breach attracted scrutiny from lawmakers in Washington and criticism from consumers and banks, igniting a debate about the role credit bureaus play in lending.(Adds comment from Chinese officials in sixth paragraph.)\--With assistance from Jenny Surane.To contact the reporters on this story: Alyza Sebenius in Washington at firstname.lastname@example.org;Chris Strohm in Washington at email@example.comTo contact the editors responsible for this story: Andrew Martin at firstname.lastname@example.org, Bill FariesFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- China warned France against treating Huawei Technologies Co. differently from European competitors when it comes to future 5G network equipment contracts, as the U.S. mounts a campaign to keep the Chinese tech giant at bay.In a lengthy statement issued on Sunday on its website, the Chinese embassy in Paris urged France to establish “transparent criteria and treat all companies in a similar way,” referring to telecom equipment makers.It also warned that a difference in treatment based on the country of origin would be considered “blatant discrimination” and “disguised protectionism.”The statement also carried a veiled warning.“We do not wish to see the development” in China of Finland’s Nokia Oyj and Sweden’s Ericsson AB being “impacted because of discrimination and protectionism” against Huawei by France and other European countries, the embassy said.Why 5G Mobile Is Arriving With a Subplot of Espionage: QuickTakeThe statement comes as France prepares to auction off 5G spectrum in April. France’s main carrier, Orange SA, has already announced it would leave Huawei out of its 5G network and work instead with Nokia and Ericsson.But two other French carriers who’ve been reliant on Huawei for their 4G networks, Altice Europe NV’s SFR and Bouygues SA’s telecom unit, have yet to name their 5G partners.The U.S. has been pressuring European allies to ban Huawei over fears that China’s government may be able to access its systems for spying. Huawei and Beijing officials deny there’s any such risk.“Huawei’s 5G equipment are totally safe” and have never presented any “backdoor” lapses, the statement from the embassy added.The U.K. government has faced a backlash from some senior lawmakers in its own party following a decision last month to let Huawei play a limited role in its 5G networks. That prompted one of China’s top diplomats in Britain to call their opposition “a witch hunt” in an interview with the BBC on Sunday.President Donald Trump has privately castigated Prime Minister Boris Johnson, and U.S. Secretary of State Mike Pompeo didn’t rule out the possibility that the episode could hurt post-Brexit trade talks between the countries.(Adds Chinese ambassador comment in penultimate paragraph.)\--With assistance from Thomas Seal.To contact the reporter on this story: Angelina Rascouet in Paris at email@example.comTo contact the editors responsible for this story: Thomas Pfeiffer at firstname.lastname@example.org, Jennifer Ryan, Anne PollakFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
RESEARCH REPORTS These reports, excerpted and edited by Barron’s, were issued recently by investment and research firms. The reports are a sampling of analysts’ thinking; they should not be considered the views or recommendations of Barron’s.
Attorney General William Barr said the move could help to limit the potential for China’s Huawei Technologies to dominate the rollout of 5G telecommunications service.
Tesla is in a typical dot-com-like bubble, according to a report that analyzes bubbles across a range of securities.
Shares of both Ericsson and Nokia advanced more than 3% in Europe on Friday, following comments by U.S. Attorney General William Barr, who said the U.S. and allies should consider taking an interest in the European telecom-equipment makers to thwart China's Huawei. "Some propose that these concerns could be met by the United States aligning itself with Nokia and/or Ericsson through American ownership of a controlling stake, either directly or through a consortium of private American and allied companies," Barr said, according to a Justice Department transcript. "Putting our large market and financial muscle behind one or both of these firms would make it a more formidable competitor and eliminate concerns over its staying power."
Deutsche Telekom has told supplier Nokia it must improve its products and service to win business installing the German group's 5G wireless networks in Europe, according to internal documents and a source with direct knowledge of the matter. Europe's biggest telecoms operator has dropped Nokia as a provider of radio gear from all but one of its dozen markets in the region, according to the source and the documents - briefing notes for top Deutsche Telekom management reviewed by Reuters. The documents - written by the vendor management team for internal meetings and talks with Nokia between July and November last year - also show the German group considered Nokia the worst performer among all suppliers in 5G tests and deployments.
Analysts polled by Bloomberg and Refinitiv had estimated the investors to comparable net earnings per share as last year. Nokia reported a quarterly profit of $1.24 billion, up 1% year-on-year, and beating analyst estimates by 3.67%. The upbeat earnings came as a surprise as Nokia downgraded its outlook for the quarter in October.
(Bloomberg) -- Want the lowdown on European markets? In your inbox before the open, every day. Sign up here.Nokia Oyj shares gained after the company reported fourth-quarter profit that exceeded expectations, bringing relief to investors concerned about the Finnish company’s checkered performance in the early stages of 5G rollouts.The Finnish network-equipment vendor posted adjusted earnings per share of 0.15 euros in the fourth quarter, higher than the 0.13 euros analysts surveyed by Bloomberg had expected on average.Key InsightsThe improvement in earnings reflects progress on the company’s cost savings program, though lower gross profit, particularly within the mobile access part of the company’s network division, was a drag on the results.Though operating profit of 1.13 billion euros ($1.2 billion) exceeds the Bloomberg consensus estimate of 1.09 billion euros, the company remains under pressure after it slashed its outlook in October and faces the challenge of reducing costs for making equipment to upgrade networks to 5G from 4G.Nokia warned that, excluding China, its addressable market is likely to be stagnant this year compared with 2019, and that pursuing market share in China would challenge profitability -- meanwhile, rival Ericsson AB has been aggressive in trying to expand there.“We have faced challenges in Mobile Access and in cash generation,” Chief Executive Officer Rajeev Suri said in a statement. “While I believe that 2020 will present its share of challenges, I am confident that we are taking the right steps to deliver progressive improvement over the course of this year and to position us for a stronger 2021.”Market ReactionNokia shares gained 4.1% as of 10:19 a.m. in Helsinki. Though the shares are up about 14% so far this year, they still haven’t made up for their 23% drop after the company’s third-quarter report in October.Get MoreNokia employees say management has been distracted by internal politics as it struggles to integrate Alcatel-Lucent following its takeover in 2016.The departure of Chairman Risto Siilasmaa and Chief Operating Officer Joerg Erlemeier were both announced in the wake of the October profit warning, stirring speculation about deeper changes at the company.See the numbers hereGet the statement(Updates with context in first bullet under Market Reaction)To contact the reporter on this story: Niclas Rolander in Stockholm at email@example.comTo contact the editors responsible for this story: Thomas Pfeiffer at firstname.lastname@example.org, Jennifer RyanFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Want the lowdown on European markets? In your inbox before the open, every day. Sign up here.BT Group Plc is expecting a 500 million-pound ($650 million) hit over the next five years from the U.K.’s decision to restrict Huawei Technologies Co. in the nation’s broadband infrastructure.Chief Executive Officer Philip Jansen said Thursday the telecommunications company is reviewing the government’s guidance to determine the full impact on its plans. Huawei is one of BT’s biggest suppliers of telecom equipment, and in the U.K. has a 44% market share in full-fiber components.BT shares fell 6.3% at 9:37 a.m. in London after the company reported third-quarter profit that missed analyst estimates. The impact on BT of the new rules on telecom suppliers was “worse than expected,” said analysts led by Carl Murdock-Smith at Berenberg.Britain decided on Tuesday to ban the Shenzhen-based vendor’s gear from the core of new wireless networks and cap its market share in next-generation 5G technology and fiber-to-the-home at 35%. Carriers have three years to make the needed changes. Though BT had already begun efforts to remove Huawei from the core of the EE mobile network it acquired in 2016, it will now need to lean more on other suppliers such as Nokia Oyj for the rest.U.K.’s Huawei Limits Invite New Players to Redraw Telecom MarketThe bulk of the cost to meet the new guidelines will come from the need to switch some Huawei 4G kit to gear made by a different supplier, in order for new 5G equipment to be layered on top of the older antennas, Jansen said on a call with reporters.“Targets stay the same, costs go up, and there’s a lot of operational upheaval. But we can manage it,” Jansen said. As for the time limits, Jansen said that three years is “one of the options we considered, and what we said today is we can do that, no problem.”His initial assessment is the first from one of the nation’s top carriers. For BT, the matter is not the only regulatory issue that could weigh on its future.Fiber InvestmentBT also called for more clarity on the U.K.’s push to roll out fiber-optic broadband across the country, pointing to the need for a fair return on further investment, and lower property taxes. A step-up in construction could need an extra 400 million pounds to 600 million pounds per year, which may need to be funded from a cut to the dividend or additional borrowing.“Boris’s objective of full fiber to the whole country by 2025 is possible. It’s just very very hard. And we have no time to waste,” Jansen said on an call to reporters. “My sadness is I don’t think those things will get resolved quickly and therefore he may well miss” the target.BT reported adjusted earnings before interest, tax, depreciation and amortization of 1.98 billion pounds, versus a company-compiled consensus of 2 billion pounds. The miss was due to underperformance at the company’s IT services division.Prospects for a marked improvement in profitability any time soon are dim: Rivals have undercut BT on prices for new 5G mobile services, Vodafone Group Plc has poached key enterprise customer Liberty Global Plc, while watchdog Ofcom is introducing rules which make it easier for customers to find lower tariffs and switch providers.What Bloomberg Intelligence Says“A cut to BT’s dividend from fiscal 2021 now looks almost inevitable, in our view, as higher 5G and full-fiber network build-out costs add to an enduring squeeze on profit from regulation and rivalry.”\--Matthew Bloxham, telecom analystJansen said the profit result was “slightly” below expectations, and “we remain on track to meet our outlook for the full year.”However James Ratzer and Ben Rickett, analysts at New Street Research, questioned the company’s ability to achieve profit growth by next year, and said the costs from the government’s Huawei decision could be a precursor to a reduction in free cash flow expectations.The consensus of analyst estimates published by BT is for Ebitda to increase 0.2% by the end of the fiscal year ending in March 2021. Jansen’s predecessor, Gavin Patterson, said in May 2018 that Ebitda could return to growth from 2021.“The current Ebitda trends will also raise questions on whether FY21 Ebitda can grow, as consensus and the company currently expect,” the analysts said.(Adds CEO quote in sixth and ninth paragraphs, analyst comment in last paragraph, updates share price)To contact the reporter on this story: Thomas Seal in London at email@example.comTo contact the editors responsible for this story: Rebecca Penty at firstname.lastname@example.org, Jennifer RyanFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- How would you feel if your doctor, on hearing you’ve got diet-related health concerns, just told you to watch your diet? “I know,” you respond. “But which parts of my diet? What should I cut out and how much?” The reply: You should closely study the list of ingredients in anything you eat and decide for yourself.This is pretty similar to the European Union’s recommendations for dealing with Huawei Technologies Co., the world’s largest maker of telecommunications equipment. The Chinese firm has become a source of concern, not least in the U.S., over risks that it could create backdoors in the networks it helps build for exploitation by Chinese state actors.The EU’s executive body on Wednesday unveiled its much-anticipated guidelines for how the bloc’s national governments should handle cybersecurity in the era of fifth-generation mobile networks. The suggestions are sensible. They include assessing the risk profile of suppliers, putting restrictions on those that don’t pass the smell test, auditing operators and ensuring a diversity of suppliers. Crucially, it fails explicitly to name Huawei or China, instead referring to “high-risk suppliers.” Member states have the leeway to determine what constitutes such a supplier and then implement any solutions themselves.The problem is that some countries are far better equipped to tackle the challenge than others, as exhibited by the U.K.’s measured and well-considered solution to tackling Huawei unveiled on Tuesday. The soon-to-be-former EU member’s plan will clearly require constant ongoing work and revisions, but Britain has been proactively tackling the issue for more than a decade. Back in 2010, it set up a center in Oxfordshire that evaluates all of Huawei’s products before they enter the British network.Along the way, the U.K. has been proactive about limiting Huawei’s role in its domestic telecoms industry. So when Prime Minister Boris Johnson said the Chinese firm would be kept out of the core network and restricted to 35% of the radio-access network, he was to an extent simply reaffirming the existing reality.The situation is significantly different in Germany. The country’s incumbent operator, Deutsche Telekom AG, is dependent upon Huawei products for half of its network equipment, perhaps more. A similar lab to the one in Oxfordshire was only set up in 2018 in Bonn, and is considered less advanced.“We’re very late to wake up,” Thorsten Benner, co-founder of the Global Public Policy Institute in Berlin, told me. “The U.K. intelligence services saw it as a problem all along. Germany just went for the cheapest supplier.”So as much as the measures outlined by the European Commission make sense, following them effectively is a tougher proposition. And if it’s hard for Germany, Europe’s largest and most prosperous nation, the prospects are dimmer for smaller states. Take Hungary, for instance, where Huawei employs 2,000 people and has a major logistics center.Some of the responsibility for the quandary must be borne by the Commission itself. Competition policy has repeatedly blocked mergers in the region that might have helped carriers’ profitability: Average revenue per user has fallen from 21.60 euros ($23.75) a month in 2008 to 12.80 euros in 2018. That has forced carriers to find cost-savings elsewhere, providing an opening for Huawei to make inroads with its low-cost gear (thanks to subsidies from the Chinese state), and displace the pricier European rivals, Ericsson AB and Nokia Oyj.The situation is exacerbated in markets such as Poland or Romania, where revenue per user averages less than 10 euros. The contrast with the U.S., where AT&T Inc. and Verizon Communications Inc. enjoy income of close to $50 per user, is stark. They enjoy far healthier returns on investment.The EU is finally proposing checks and balances that should have been in place a long time ago. But they are little more than a starting point. Don’t be surprised if the likes of Germany, France, Spain and Italy lean more heavily on the U.K.’s lead. For the rest, there’s still plenty of scope for member states to continue voraciously gobbling down the Chinese candy.To contact the author of this story: Alex Webb at email@example.comTo contact the editor responsible for this story: Melissa Pozsgay at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Alex Webb is a Bloomberg Opinion columnist covering Europe's technology, media and communications industries. He previously covered Apple and other technology companies for Bloomberg News in San Francisco.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.