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To: Ruffian who wrote (26452)4/16/2004 11:01:47 PM
From: elmatador
   of 34859
 
Samsung mounts challenge to Nokia
By Christopher Brown-Humes in Stockholm
Published: April 16 2004 21:08 | Last Updated: April 16 2004 21:08


Nokia, the world's leading maker of mobile handsets, on Friday forecast lower second quarter profits and little chance of recovery until the end of the year, as it faced a growing challenge from Samsung and other mobile groups.


Its announcement, which sparked fears that the Finnish group's golden age might be over, came as Samsung of South Korea underlined its position as a challenger, declaring a first quarter net profit that nearly trebled to Won3,140bn ($2.7bn), compared to Won1,130bn a year earlier. "Maybe Nokia is no longer the coolest brand," said Ben Wood, analyst at Gartner in London.

This year's rally in the Samsung share price has seen its market value increase to about $88bn, making it Asia's most valuable technology company, nearly twice the size of Japan's Sony. Nokia's market capitalisation is $75bn.

Nokia's gloomy news, following the company's shock profit warning last week, sent its shares down a further 8.2 per cent to €12.40. In early March, they were trading at nearly €19.

Last week's warning about the first quarter stunned the market, given strong growth in the overall handset market, but investors were hoping for brighter news about the outlook yesterday. Nokia said second quarter profits would be lower, adjusted for one-off items, and sales might also be lower than last year's ?7bn. It forecast earnings per share of €0.13 to €0.15 for the quarter, against the ?0.18 the market was expecting.

Jorma Ollila, Nokia chairman and chief executive, said the company would sacrifice margins in a bid to stabilise its market share. It would not be until the fourth quarter that it would feel the benefit of its new product launches, he indicated. Mr Ollila said the company was facing a stronger competitive challenge and that Nokia's mid-market phone offering was inadequate.

"There have been execution delays. We should have been six months ahead, ideally, with new product introductions," Mr Ollila said. "[Market] share is important and we want to make sure we reach stability . . . sooner rather than later."

Nokia saw its first quarter mobile phone sales plunge 15 per cent to ?4.25bn, while operating profits fell 25 per cent to €1.09bn. This was in spite of an overall market growth of 29 per cent.

Samsung sold a record 20m handsets in the first quarter - 14 per cent of the global market - and said its 2004 sales target of 65m phones was looking conservative.

Richard Windsor, analyst at Nomura in London, said Nokia was hurting from lower market share, falling phone prices and weaker profitability. He warned that the company also faced a tough 2005, when operators would be trying to establish their own brands and the third-generation market would be developing.

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To: Eric L who wrote (26436)4/17/2004 2:52:58 AM
From: Mike Magee
   of 34859
 
Nokia must seriously be off its rockers bothering with this Ngage stuff.

Mike

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To: pyslent who wrote (26453)4/17/2004 5:04:45 AM
From: Ruffian
   of 34859
 
we live in an Emotional world now, never loose sight of that.........it is here to stay.....as far as NOK, yes it will be a screaming buy, but not just yet, for me.................

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To: Mike Magee who wrote (26455)4/17/2004 5:05:48 AM
From: Ruffian
   of 34859
 
Samsung mounts challenge to Nokia
By Christopher Brown-Humes in Stockholm
Published: April 16 2004 21:08 | Last Updated: April 16 2004 21:08

Nokia, the world's leading maker of mobile handsets, on Friday forecast lower second quarter profits and little chance of recovery until the end of the year, as it faced a growing challenge from Samsung and other mobile groups.

Its announcement, which sparked fears that the Finnish group's golden age might be over, came as Samsung of South Korea underlined its position as a challenger, declaring a first quarter net profit that nearly trebled to Won3,140bn ($2.7bn), compared to Won1,130bn a year earlier. "Maybe Nokia is no longer the coolest brand," said Ben Wood, analyst at Gartner in London.

This year's rally in the Samsung share price has seen its market value increase to about $88bn, making it Asia's most valuable technology company, nearly twice the size of Japan's Sony. Nokia's market capitalisation is $75bn.

Nokia's gloomy news, following the company's shock profit warning last week, sent its shares down a further 8.2 per cent to €12.40. In early March, they were trading at nearly €19.

Last week's warning about the first quarter stunned the market, given strong growth in the overall handset market, but investors were hoping for brighter news about the outlook yesterday. Nokia said second quarter profits would be lower, adjusted for one-off items, and sales might also be lower than last year's ?7bn. It forecast earnings per share of €0.13 to €0.15 for the quarter, against the ?0.18 the market was expecting.

Jorma Ollila, Nokia chairman and chief executive, said the company would sacrifice margins in a bid to stabilise its market share. It would not be until the fourth quarter that it would feel the benefit of its new product launches, he indicated. Mr Ollila said the company was facing a stronger competitive challenge and that Nokia's mid-market phone offering was inadequate.

"There have been execution delays. We should have been six months ahead, ideally, with new product introductions," Mr Ollila said. "[Market] share is important and we want to make sure we reach stability . . . sooner rather than later."

Nokia saw its first quarter mobile phone sales plunge 15 per cent to ?4.25bn, while operating profits fell 25 per cent to €1.09bn. This was in spite of an overall market growth of 29 per cent.

Samsung sold a record 20m handsets in the first quarter - 14 per cent of the global market - and said its 2004 sales target of 65m phones was looking conservative.

Richard Windsor, analyst at Nomura in London, said Nokia was hurting from lower market share, falling phone prices and weaker profitability. He warned that the company also faced a tough 2005, when operators would be trying to establish their own brands and the third-generation market would be developing.

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To: Nils Mork-Ulnes who started this subject4/17/2004 7:09:17 AM
From: saukriver
   of 34859
 
April 17, 2004
Slow to Adapt, Nokia Loses Market Share in Latest Cellphones
By ALAN COWELL

LONDON, April 16 - Nokia, the world's largest mobile phone maker, paid a heavy price on Friday for missing the trend toward stylish clamshell phone handsets, denting its vaunted reputation as the arbiter of cellphone chic.

Biting into Nokia's market share, the company's hottest rival, Samsung Electronics, reported soaring profits, while Nokia forecast a further slump. Nokia shares touched a 13-month low as investors began looking toward other cellphone makers regarded as likely to tap into a market of fleeting fashions and fickle loyalties.

"No brand can stay cool forever," said Peter Firstbrook, an analyst with the META Group, a technology research consultant firm in Stamford, Conn. "Nokia has been slow to adapt."

The contrast between Nokia, based in Finland, and Samsung, based in South Korea, could hardly have been more stark as they made their announcements a few hours apart.

Samsung recorded $2.7 billion in profit in the first quarter, an increase of 178 percent from the period a year ago and its best quarter ever; sales were up 50 percent. Nokia said that the 2 percent drop in its first-quarter profits, announced last week, could be followed by second-quarter sales that are likely to be "slightly below" the $8.4 billion it recorded in the period last year.

Samsung executives seemed surprised by the surge in their company's fortunes, and forecast better things to come in the second quarter. Nokia said it was "not satisfied with our sales development during the first quarter."

Nokia still has the leading share of the world handset market, manufacturing 35 percent of the 128 million mobile phones sold in the first quarter. But Nokia lost three percentage points of share from the last quarter of 2003, while Samsung, which ranks third by sales volume after Nokia and Motorola, gained ground.

Samsung said on Friday that it expected its market share to rise by almost four percentage points, to 14 percent. Nokia said its goal was still to secure 40 percent of world mobile phone sales.

Most striking, however, is that recent declines in Nokia's share price mean that Samsung's market capitalization has now overtaken Nokia's as the largest for any technology company outside the United States. The shift in part reflects Samsung's much broader product line, which includes memory chips and flat-screen displays as well as high-end mobile phones, at a time when all those products are fetching high prices.

Shares of Nokia, which at one point in the day were off nearly 10 percent, closed at 12.40 euros, down 8.2 percent. Samsung's share price also fell on Friday, along with most Korean companies, but after the day's trading, Samsung's market capitalization was equivalent to $76.4 billion, compared with $69.4 billion for Nokia.

"Nokia has obviously made some major mistakes," said Urban Ekelund, an analyst with Redeye, a private research company in Stockholm. "Firstly, they haven't launched clamshell products, which came to Asia one and a half years ago. And second, they haven't launched products with good color screens and cameras."

By contrast, Samsung has been "focusing on high-end products," Mr. Ekelund said in a telephone interview, while "Nokia has been focusing too much on the low end," and on emerging economies rather than richer markets like the United States.

In a television interview, Jorma Ollila, Nokia's chief executive, said, "There were some changes in the products of our competitors, and we were not as swift in moving."

In a conference call with analysts, Mr. Ollila said that Nokia planned to introduce 31 new models this year, including about 6 of the flip-top type that Samsung and Motorola were quicker to unveil. But that may not reverse its fortunes.

"As you get bigger, you become the target, and it becomes harder to move quickly," said Mr. Firstbrook of the META Group. "Nokia became bigger not necessarily because they were best, but because everyone else was stumbling. Now there is more competition, and the competition is getting better. Nokia is a bit of a dinosaur in terms of changing direction. I don't think there's any one thing they can do to turn around."

Even as Nokia shares fell on Friday, those of European rivals like Ericsson and Siemens gained, as investors shifted away from what had once been seen as a rock-solid bellwether stock.

The woes came after earlier signs of trouble. On April 6, Nokia warned investors that first-quarter sales had fallen about 2 percent, a performance far short of the company's forecast of a gain of 7 percent. On Friday it said that its second-quarter earnings would probably be 0.13 euro to 0.15 euro a share, well below the 0.19 euro figure of the period a year ago, which included the costs of job cuts.

The company also said on Friday that while sales of mobile phones in general rose at a 29 percent annual rate in the first quarter, Nokia's shipments increased by only 19 percent. Operating profit at its mobile phone division fell to 1.09 billion euros.

nytimes.com

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To: saukriver who wrote (26458)4/17/2004 8:28:12 AM
From: Eric L
   of 34859
 
Comparative R&D Investments

<< The contrast between Nokia, based in Finland, and Samsung, based in South Korea, could hardly have been more stark as they made their announcements a few hours apart. >>

Somewhat surprising, particularly in light of Samsung's superlative quarter ...

>> Korean Companies Losing Momentum in R&D

Korea Herald
April 09, 2004

koreaherald.co.kr

[In 2003] No Korean company spent more than 10 percent of their revenue on R&D with 17 spending less than 4 percent, while Intel, Motorola and Nokia spent between 12 to 16 percent of their revenue on R&D in comparison.

Samsung Electronics, which topped the country with a 73.8 trillion won market value last year, spent the most on R&D among Korean companies, investing 8 percent of their revenue. ...

Nokia ...

In part, it's a direct result of the extraordinary intellectual and technical resources at Nokia's disposal: The company boasts an annual R&D budget of $3 billion, and 40% of its 52,000 employees are involved in R&D. Most Nokia business units have at least three R&D sites. Those sites are located in 15 countries and are usually adjacent to leading universities and relevant industry clusters.
<<

<snip>

Samsung's Q1 abstracted here:

Message 20033465

- Eric -

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To: Mike Magee who wrote (26455)4/17/2004 9:19:42 AM
From: Eric L
   of 34859
 
Risk Adversity ...

Hi Mike,

<< Nokia must seriously be off its rockers bothering with this Ngage stuff. >>

Maybe they are off their rockers to spin off a multimedia division and put Anssi Vanjoki in charge of it ...

... and maybe we don't need 3G mobile multimedia wireless telephony ...

... and maybe life won't go mobile ...

... and maybe mobiles should just be used for talking, SMS, and MMS ...

... and maybe "phone makers" should just make "phones" ...

... but I doubt it.

I do find it a little surprising that they released the original sidetalker - which is probably destined to become a cult classic - with the design deficiencies it had.

On the plus side, 9 months after the first shipment, they'll be shipping a revamped cost reduced model, which overcomes each and every deficiency of the original model - including the price point.

Should they have waited? If they did they wouldn't have 30+ game titles shipping. To be viable in the gaming world, they need 3x that number, but to even begin gaining traction they need at least 30, and they have them.

N-Gage 2, which probably won't see daylight until next year will undoubtedly make use of one of TI's OMAP 2 family of ARM11 based multi-engine parallel processors and probably a custom version of same that will be used in other products based on the same platform.

Meantime they are first into a new genre - mobile online interactive gaming - that would emerge with them, or without them.

It's not always best to be first, but in this case they are first, for better or for worse.

Heck, maybe they shouldn't have established an enterprise division.

But we won't know until at least the end of 2005 ...

... and we are gonna find out whether Anssi really has the "right stuff."

- Eric -

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To: Eric L who wrote (26460)4/17/2004 10:07:13 AM
From: 10K a day
   of 34859
 
Hi eric...I'm no expert on this stuff...

But i had an A.T. and T wireless....'old generation' plastic motorola...(free phone)

And i could email from it.

I can't email from my Nokia...'old generation'
but the thing is solid...I drop it daily.
And it's really solid.

I think A.t. and T....get the chicken before the egg....because they try to migrate the email and internet stuff to 'next generation'...(so they can charge more)

And the coverage just doesn't support it ...in some fast growing areas...

I had to go back to 'old generation' phone to get coverage...and what i used to be able to do with a cheap phone...Now i can't do with a nokia that i paid 100 bucks for...(and it's the phone)

Oh well....

No big deal. It don't stress me out really. It was just nice to send email from my cheap little motororola...on the old network. (if it ain't broke don't fix it)

:)

(incidently, that's why i could never understand the appeal of the blackberry and RIMM....but oh well) ...(i think that stock will crash bad ...one day)

hav a nice day...

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To: Nils Mork-Ulnes who started this subject4/17/2004 10:34:42 AM
From: brian h
   of 34859
 
Tero,

I told you so. Korean and other Asian manufacturers are eating Nokia's lunch all over the place. The trend will continue. I know Finnish are competitive ae well. We will see how good you guys are to maintain you guys lead.

Time will tell.

BH

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To: pyslent who wrote (26451)4/17/2004 10:51:00 AM
From: Eric L
   of 34859
 
Nokia Going Forward ...

pyslent,

<< stock at this level appears to be an excellent buy, based on the fundamentals. >>

Despite the fact that they laid an egg this quarter the fundamentals are unquestionably totally intact.

<< With the earnings warnings, do you think the annual dividend is in jeapardy? >>

Highly unlikely for the Nokia cash machine to eliminate the annual dividend. Share buyback reduction or suspension would most certainly precede any consideration of suspension of the annual dividend, and you might want to take a look at slides 10 and 11 from the Q1 Earnings CC:

media.corporate-ir.net

<< Or can anyone recommend an active message board that might discuss issues such as this? >>

Most informative discussions on Nokia I've had in recent years have been on the Nokia board at TMF. Light traffic at the moment, but some quality investors check in.

I could build you a bull or a bear case for investing in Nokia at or near today's entry point (see below ¹) but to any one considering an investment in Nokia and willing to spend 10 to 20 hours in DD, I would recommend the following:

* Listen to Thursday's earnings CC ...

corporate-ir.net

* Listen to the November 24, 2003 Nokia Capital Market Days presentations (5 hours and 30 minutes) in their entirety ...

corporate-ir.net

* Read Dr. JT Bergqvist's presentation from Cannes (unfortunately can't find a link to his presentation).

media.corporate-ir.net

* Screen Kai Konola's "Nokia Networks" presentation from CeBIT, even though Kai isn't JT ...

corporate-ir.net

* Read Dan Steinbock's "The Nokia Revolution" (skipping the history in the 1st 86 pages). While this book is 3 years old, it's one of the best corporate bios I've read in recent years and the 5 young corporate leaders that have been in place since '92, are still in place, so its really pretty current.

tinyurl.com

* Watch the IR calendar for a spring Nokia Capital Market Days or Analysts Day.

¹ Personally and despite the fact that Nokia is is a core hold I reduced at $21 in January (annual trimming) and reduced further in March at $23 because I thought Nokia (and the sector) had gotten ahead of itself, and having been through a few I had concerns about the time it would take for the major reorg announced in Q4 - which I consider to be very forward thinking, and very positive - to synch itself. I bought back ½ of the position I reduced in Q1 yesterday at $14.50. I have a GTC limit buy in at $13.50 for the remainder of the position I reduced.

Best,

- Eric -

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