HTC Surpasses Nokia’s Market Value? Ahem. Well, no, not anymore.

973 Billion TWD is 33.6B USD

993 Billion TWD is 34.27 B USD

Bloomberg are reporting:

HTC Surpasses Nokia’s Market Value as Smartphones Drive Profit

http://www.bloomberg.com/news/2011-04-07/htc-surpasses-nokia-s-market-value-as-smartphones-drive-profit.html

I found the story after I read Andre’s (@andref1989) tweet:

You know that the stock market is NOT representative of a company’s financials when Nokia is worth less than HTC

First things first. As of this moment, based on “Market Cap” Nokia is NOT worth less as all the news outlets show. HTC at 33.6B (current snapshot  and the value Bloomberg 33.8). What’s Nokia? Not 33.6, but now 34.27)

If you’ve been following Nokia’s stocks, you know it’s has been quite a roller coaster journey. Media outlets love reporting how they took a tumble in 2007 after iPhone arrived. Actually arrival of iPhone didn’t do anything. Market was still unsure of iPhone and quite confident about Nokia. Nokia’s stocks continued to soar. BUT it was the continued LACK of sufficient response from Nokia that caused that tumble. At the peak, it was about 148 Billion (just working out from share price/stock amount).

It’s not the first time Nokia’s taken such a big tumble however. Back in 2000, Nokia would have been worth, what, 222 Billion USD? I don’t remember why it was that much at the turn of the year. From 1998, Nokia became the number 1 manufacturer of phones and to this day, has continued to be number 1. But stronger competition is nipping at its feet. For quite a while we’ve been waiting in the transition period. Hoping, longing that Nokia will finally have something to show us.

This time early April last year, Nokia’s market cap was 57Billion USD. It was gradually recovering, epecially after a good Q4 2009 results, excellent sales, and Intel-Nokia MeeGo partnership. It took a tumble after earnings report. It was much expected that the arrival of Symbian^3 handsets would help pick Nokia back up, MeeGo phone to be announced at Nokia World 2010 would save Nokia and Symbian^4 handsets will polish Symbian to the expected standards whilst Nokia’s high end is secured by MeeGo phone and the creation of the Intel-Nokia Qt ecosystem.

What you’ll note is that the press will rarely if ever talk about Nokia’s stocks rising, but love to talk about it dipping. Lowest point in 2010, Nokia’s market cap was at 31B.  For 5 months the value was consistent above 34B, pretty much 38B from September to January. On the memorable February 11 announcement, Nokia’s stocks increased to 44.5 B amid speculations of something big happening on Capital Markets Day. It was an unbelievable announcement that not only would Nokia go Windows Phone, but Symbian (the world’s largest smartphone OS) would be dropped.

I went on quite a departure there which I should give more explanation to but I’m rushing due to time constraints.

The 33 percent surge in the stock this year makes HTC, which specializes in making handsets with touch screens and Internet connectivity, the world’s third-largest maker of smartphones by market value.

Who’s number 1? Where does Samsung/Apple fit? Are they 1 and 2? What about HP?

Nokia’s Market cap dipped as low as 29.8B this year.During that time RIM(BlackBerry) had “eclipsed” Nokia. That also happened last year where RIM’s market cap exceeded Nokia. This was during Nokia’s low point. But it switches ever so quickly. RIM’s market cap is now 29.1B (consistent over 31B for past few months but recent drop).

Point is, unless you really understand the numbers, and the whole stock market itself (and I don’t really myself), you can be easily manipulated by controlled presentation of numbers. e.g. omitting the detail of a previous short surge followed by a drop makes that drop even bigger.

Bloomberg notes:

HTC’s operating margin, which measures the percentage of sales less the cost of making and selling phones, was 16 percent in the quarter ended Dec. 31. Nokia’s was 7 percent over the period

Might that be because Nokia are producing quite a number of feature phones? What proportion of HTCs sales are in feature phones? What about Nokia? What were those 400M non smartphones sold (vs 125M smartphones – still a pretty epic number). Nokias phones, they do pack quite a bang for their buck. What about that Nokia X1-01 music phone for 34 Euros?! Packing so many punches.)

Perhaps the point of the article was just to show how well HTC is doing, as opposed to how bad Nokia is (though how cool is it to beat the number one boxer if he’s actually passed out on the floor and you’re just kicking him?)

HTC snapshot.

We’ll see how the supposed April 12 event will effect Nokia’s Market cap (if at all). Apart from the Nokia N8, we NEVER saw a real flagship for Nokia. MeeGo Phone was supposed to be that flagship to help restore confidence in Nokia. We are still waiting for a Flagship that will lead long term. A flagship that is not just the best of Nokia but also perhaps giving other manufacturers something to look up to. N8 did this in parts, but it needs to do this in the aspects most important in the media’s/society’s perceptions of smartphones today. Unlike Apple, for the most part, Nokia cannot control and direct what these perceptions should be.

Note, that we’re still in further transition years. Two more apparently as we transition from Symbian to Windows Phone. Whilst all other manufacturers pretty much are just doing finishing touches to their “homes” , we’re replacing the foundation, swapping walls, refitting the kitchen, replacing the stairs, taking out the living room, burning all the furniture.

Ah, meh, have to go. Will edit this again perhaps.

Update: Just thought I’d update this with one of the first comments on Engadget who also posted about this:

Do you have any idea how market cap works?

You do realise that market cap isn’t actually a REAL value as such. If everyone decided to sell their shares, heck, even if 1/10th of people decided to sell their shares, you still think Apple is worth $311 billion?

Market Cap is quite possibly the worst value to access a company as it’s the “PERCEIVED” value of a company by what the market is prepared to pay for “ONE” share, multiplied to “ALL” it’s available shares.

Given that Jobs has been the innovator at Apple, that “PERCEIVED” value is as sure as day going to fall.

You must be smoking some really strong crack, or have really bad math, to assume that Apple is going to be worth $1 Trillion.

– William Topping

Category: Rant