Canaccord Genuity Morning Coffee on Nokia (NOK): Dropped Call
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Price: $3.69 +6.03%
Rating Summary:
20 Buy, 17 Hold, 6 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 5 | Down: 3 | New: 2
Rating Summary:
20 Buy, 17 Hold, 6 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 5 | Down: 3 | New: 2
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Canaccord Genuity Morning Coffee on Nokia (NYSE: NOK): Dropped call.
After trading higher Monday as many believed there would be more interest in Windows smartphones following Apple’s (Nasdaq: AAPL) patent victory over Samsung, Nokia fell on Tuesday (and are down again this morning) after some analysts cautioned that prospects for the Finnish phone maker may not be as bright as some hope. One Wall Street analyst said that while the patent ruling is positive for Windows-based phones, “In developed markets in Q4 and H1 2013, Nokia products are going to compete against the iPhone5 and Samsung Galaxy3 and 4. No chance, in our view. And, ultimately, Nokia is a hardware manufacturer that will compete with Samsung (and the like) if Microsoft’s (Nasdaq: MSFT) ecosystem is successful. At €2.5, assuming a 10x PE, the market is pricing in 5% operating margins for Devices (note that Dell (Nasdaq: DELL), H-P (NYSE: HPQ), Acer, Lenovo and Asustek margins are collectively 2% in PC land), €55 ASPs (up from recent low 50s), and 25% handset market share – that’s up from the recent low of 22%, i.e., every 5% market share on these assumptions equals 5c of earnings. Smoking something – sure seems like it to us.” Another analyst noted, “People want iPhones and Androids and don’t want Windows and BB phones. I don’t see this changing.” All in, while the recent patent ruling could be a short term positive for Nokia, it looks like it is still a long, and bumpy road for the company to return to prominence.
After trading higher Monday as many believed there would be more interest in Windows smartphones following Apple’s (Nasdaq: AAPL) patent victory over Samsung, Nokia fell on Tuesday (and are down again this morning) after some analysts cautioned that prospects for the Finnish phone maker may not be as bright as some hope. One Wall Street analyst said that while the patent ruling is positive for Windows-based phones, “In developed markets in Q4 and H1 2013, Nokia products are going to compete against the iPhone5 and Samsung Galaxy3 and 4. No chance, in our view. And, ultimately, Nokia is a hardware manufacturer that will compete with Samsung (and the like) if Microsoft’s (Nasdaq: MSFT) ecosystem is successful. At €2.5, assuming a 10x PE, the market is pricing in 5% operating margins for Devices (note that Dell (Nasdaq: DELL), H-P (NYSE: HPQ), Acer, Lenovo and Asustek margins are collectively 2% in PC land), €55 ASPs (up from recent low 50s), and 25% handset market share – that’s up from the recent low of 22%, i.e., every 5% market share on these assumptions equals 5c of earnings. Smoking something – sure seems like it to us.” Another analyst noted, “People want iPhones and Androids and don’t want Windows and BB phones. I don’t see this changing.” All in, while the recent patent ruling could be a short term positive for Nokia, it looks like it is still a long, and bumpy road for the company to return to prominence.
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