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Forbes Video: Is Nokia A Better Buy Than Apple?

| November 19, 2012 | 24 Replies

Interesting video from Forbes where they discuss whether Nokia is a better buy than Apple. I wouldn’t really say there was a lot of mention of Nokia directly though a lot of the principles in the discussion apply.

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Ariel Investments’ Rupal Bhansali on why Apple ins’t as solid as investors may think.

(Part One of a two-part interview with Steve Forbes).

by 

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Category: Lumia, Nokia

About the Author ()

Hey, thanks for reading my post. My name is Jay and I'm a medical student at the University of Manchester. When I can, I blog here at mynokiablog.com and tweet now and again @jaymontano. We also have a twitter and facebook accounts @mynokiablog and  Facebook.com/mynokiablog. Check out the tips, guides and rules for commenting >>click<< Contact us at tips(@)mynokiablog.com or email me directly on jay[at]mynokiablog.com
  • manu

    apple is better for pea brains

    • spencer1978

      Nokia is now a good bargain buy and hold for the long term or medium term. Here are the reasons why:

      1. Nokia Siemens Networks is profitable and growing strongly (over 300 million euros profit in 3Q). Nokia and Siemens have decided to make it independent in these few years, therefore Nokia shareholders will have two companies´ shares in their hands, quite a good bonus.

      2. Navteq is profitable as well, and it is expanding its business as the world´s leading maps maker, with City Lens and Earthmine´s 3D mapping, Nokia will have a bigger slice of this pie yet.
      Right now, Navteq already has big clients such as Yahoo, Facebook, Amazon, Oracle and almost countless car companies.

      3. Nokia´s patent portfolio earns about 500 million euros a year.
      Samsung is paying Apple for intellectual property rights; HTC is paying Apple; Vringo is suing ZTE; Nokia is suing HTC; and APPLE IS PAYING NOKIA FOR INTELLECTUAL PROPERTY RIGHTS!
      Thus, it is only a matter of time when Nokia will sue Google and Samsung, if they still don´t agree to pay Nokia for its patents.

      4. Nokia´s featurephone division is doing well with Asha phones

      5. The only 1 out of 5 Nokia´s business parts, which is not profitable, is smartphone business, but
      new Lumia generation looks promising.
      Lumia 920 has features like:
      Floating-lens PureView camera with optical image stabilization
      Wireless charging
      Super sensitive and bright screen that can be used with gloves or finger nails
      Premium GPS that can be used also without internet
      Augmented reality City Lens
      Free music with no ads
      NFC
      Rich sound recording in vids
      Fastest screen on a smartphone

      Nokia also bought Scalado, the imaging technology firm in Sweden. Therefore, apart from NAVTEQ and NSN, Nokia is no doubt going big with PureView imaging technology. Some authors compare Nokia to Kodak, I think it is almost the opposite.
      Kodak was the old era and Nokia is starting the new evolution with smart-phone imaging, when consumers won´t have to carry another gadget (camera), for example during traveling.

      6. Considering now the total loss is about 17 million euros, it got much better from the 290 million (2 prior quarters each) loss.
      Nokia´s current 3.6 billion euros net cash should be enough for Nokia´s transitional period before WP8 phones take off.
      Nokia is also getting more cash from convertible bonds and selling its headquarters and other non-core assets.

      Morningstar´s analysis about Nokia:
      Share price assumption at this moment: 2.40 euro.
      Best scenario (if WP8 phones go well): the stock price will go to about 7.70 euro per share.
      Worst scenario: no bankruptcy, because Nokia would be sold in parts before that.
      Estimated price for this: intellectual properties over 1 euro per share; other business parts (smartphones, featurephones, NSN) at least over 1.50 euro per share.
      And NAVTEQ´s price not included (Nokia bought NAVTEQ with 5.7 billion euro). All in all, even in this case, Nokia share price would be at least over 2.50 euro, excluded NAVTEQ.
      In other words, the sum of parts of Nokia is worth much more than its market cap now, which means NOK share is right now heavily undervalued. Caleb Evans

      • spencer1978

        Nokia Is a Wide-Ranging Company and The Stock is With Hidden Value Right Now

        Nokia does not only make phones.

        Nokia´s feature-phone division is doing well, because of Asha phones.

        Nokia has not lost about 1 billion dollars a quarter like the media says, because Nokia has 5 business parts and 4 of them are profitable. Therefore, the exact number is much much smaller.

        Nokia´s loss is only 17 million euros any more (compared to Reuters´s consensus 277 million and Nokia´s last two previous quarters about 290 million each), this was much better.

        Nokia Siemens Networks is doing very strongly (over 300 million euros profit in 3Q. More business to come in the future: 3G in developing countries, 4G in developed and emerging countries)

        NAVTEQ was also profitable, NAVTEQ´s number might be better in 4Q, because of the deals with Amazon, Yahoo, Oracle and many car-companies.

        Nokia´s patent portfolio earns about 500 million euros a year, and the number is still increasing.

        Nokia has cut expenses (which saves about 1 billion euros a year) and in the future Nokia does not have to spend so much in R&D either, because it has teamed up with Microsoft.

        Nokia´s WP 8 devices will hit more markets, for example the Middle-East countries (Lumia phones have not been in these countries yet till now).

        New Lumia generation looks promising.

        For example Lumia 920 has features, such as:

        Floating-lens PureView camera with optical image stabilization

        Wireless charging

        Super sensitive and bright screen that can be used with gloves or finger nails

        Premium GPS that can be used also offline

        Augmented reality City Lens

        Free music with no advertisements

        NFC

        Lumia 920 does not only have a great low-light camera, but also has exceptional audio recording quality due to the 3 HAAC Rich-recording microphones.

        Right now, there is no way to compare Nokia to Apple among most smart phone consumers, but there is hope in the future.

        For example, Nokia just signed the contract with China Mobile (who has about 660 million subscribers, which is about 70% of all subscribers in this world´s biggest nation), and even though iPhone is very popular in the US and Europe, Windows Phone OS already surpasses iOS in the world´s biggest countries beside China, such as Brasil, India and Russia. Even though in these countries more low price point phones are sold, but these are the most important emerging giants in the world where Nokia´s position and brand are still quite strong. And it may be sooner than we think when more people in these countries are able to afford high end smart phones.

        Nokia has not lost about 1 billion dollars a quarter as the media says, because its other parts of business are profitable (while 1Q´s and 2Q´s total loss 290 million each, 3Q´s total loss only 17 million euros any more). Therefore, 3.6 billion euros net cash should be enough for Nokia´s transition period before WP8 phones take off. There is still enough room for a third ecosystem in this world, beside emerging markets Europe has adopted WP phones in a very encouraging way (for example Italy has already over 10% market share for WP phones, considering the Lumia debut has not been a year yet, since last November only. WP OS has already grown a lot faster compared to iOS and Android in their first quarters). Lumias were sold 9,9 million units under a year. The number is small compared to Iphones and Androids sold today, but it is not a bad start. It is more fair to compare the numbers among the 3 in their first year.

        Now when the DOWS and S&P have almost hit all time highs, investors start to think more about cheap and potential value stocks. NOK is now only about 0.8x book value, and usually NYSE stocks are on an average about 2x book value (Apple about 6x book value). Therefore, I think NOK is cheap enough for its values. Another reason is NOK has been already shorted massively about 19% of its total shares.

        Apart from Vertu and so on, Nokia still can sell its patents, since it still has about 30 000 patents in its own hands (in case Nokia needs more cash).

        If the stock price still goes cheaper and cheaper, one day some rival would bid for Nokia, just for its patents ( Motorola was acquired by Google with 12 billion dollars, this is good to remind people who underestimate intellectual properties´ value).

        Microsoft will bid for Nokia with higher premium if some company really bids for Nokia, because Nokia is in so close partnership with Microsoft that this also includes business strategies, business secrets and so on. Therefore, Microsoft won´t let any company acquire Nokia than itself. When it comes to Microsoft, it is still the net cash king in the world, after all its debts excluded, it still has a huge net cash about 50 billion dollars.

        About Nokia´s buy out: Motorola´s patents were worth about 5.5 billion, if some company bids for Nokia´s patents and Microsoft still does not acquire Nokia, Nokia will be sold in parts. Nokia has 5 business parts, therefore patent portfolio is only 1 out of 5. Now, you can count yourself how much are Nokia Siemens Networks, NAVTEQ, and feature-phone division worth.

        I know US is very important market, because Wall Street and US consumer trend give directions to market momentum around the world, still you can not neglect the power of BRIC and MIST these days.

        You can calculate yourself how many people living in these 8 BRIC- and MIST-countries. In these countries, in Brazil, Russia, India, China, Mexico, Indonesia and Turkey, Nokia´s position and brand are still quite strong (except South-Korea, but you know it is Samsung´s home-country and the smallest country among those important 8 anyway).

        Morningstar´s analysis about Nokia:

        Share price assumption at this moment: 2.40 euro

        Best scenario (if WP8 phones go well): the stock price will go to about 7.70 euro per share)

        Worst scenario: no bankruptcy, because Nokia would be sold in parts before that.

        Estimated price for this: intellectual properties over 1 euro per share; other business parts (smartphones, featurephones, NSN) at least over 1.50 euro per share.

        And NAVTEQ´s price not included (Nokia bought NAVTEQ with 5.7 billion euro). All in all, even in this case, Nokia share price would be at least over 2.50 euro, excluded NAVTEQ.

        Nokia also announced it is hiring more employees to work in Chicago (where NAVTEQ is). Who says Nokia is going bankrupt? Think twice before saying that!

        Nokia also bought Scaladon, the imaging technology firm in Sweden. Therefore, apart from NAVTEQ and NSN, Nokia is no doubt going big with PureView imaging technology. Some authors compare Nokia to Eastman-Kodak, I think it is almost the opposite.

        Eastman-Kodak was the old era and Nokia is starting the new evolution with smart-phone imaging, when consumers won´t have to carry another gadget (camera) during traveling.

        One of the reasons why Nokia is one of the most defensive stocks right now during bear markets is that Nokia has been already shorted massively about 19% of its total shares (while Apple only about 0.5%, Samsung over 2%, and other telecom companies about 4% in general).

        By the way, NAVTEQ just reported it is making navigators into 4 out of 5 cars (80%).

        And I hope Nokia will license City Lens to tablet makers like Amazon, Asus, Acer etc (at the same time it can turn Google maps users into using Nokia´s advanced mapping platform) soon.

        When also Nokia´s Devices & Services division is profitable as well, will you ever have a chance to buy NOK stock this cheap again? The answer might be: NEVER.

        Another aspect is, when now NOK has been already shorted massively about 19% of its total shares, bears could not go any further, because the share number that is available for borrowing/renting has already hit record high.

        If bears still dare to sell, there are plenty of happy buyers out there, for example Switzerland´s central bank has announced it had bought more NOK shares and has become the 5th biggest shareholder in Nokia.

        Considering now the total loss is about 17 million euros, it got much better from the 290 million (2 prior quarters each) loss.

        3.6 billion euros net cash should be enough for Nokia´s transitional period before WP8 phones take off.

        Nokia is also getting more cash from convertible bonds and selling its HQ and other non-core assets.

        Nokia is a big chance and good bargain at about 3 dollars, because Nokia Siemens Networks has grown so strongly and profitable that Nokia and Siemens have decided to make it independent in these couple of years. That means Nokia shareholders will have two companies´ shares in their hands.This is a bonus.

        The conclusion is Nokia is for long-term and medium-term investing not for short term. Just think about this, even when Apple and Google reach 1000 dollars, that is not even doubling, but in the long term Nokia has the opportunity to triple or even more. Caleb Evans

        • spencer1978

          Some people say Lumia 920 is thick and heavy, but those are only one aspects, just like iPhone 5´s map fiasco and its tiny screen. Besides, Lumia 920´s weight is only about Galaxy Note II. What is so heavy about it?
          Lumia 920 is a bit thick because of these features:
          Floating lens PureView camera with optical image stabilization
          Wireless charging
          NFC
          Super bright and sensitive screen with Gorillaglass 2

          And Lumia 920 has 32 GB storage + 7 GB Skydrive storage.

          Apple´s profit is high because of the expensive prices, but how long do you think that kind of high profit would last? Forever?
          Amazon´s and Google´s tablets are eating iPad´s market share, carriers are tired of Apple iPhone´s high margins. When Apple gets the pressure to cut down prices, it will show immediately in their results that the profit won´t be at the same high level any more, which will hit the stock downhill quarter after quarter.
          So, analyze and decide yourself.

          My friend sent me a short article from Dubai a few days ago. He used googletranslate to translate this article for me and sent me in an email. He said his father went to buy one and a half million more NOK shares, and his father´s friends are all planning to buy. So, it is very interesting to wait and see which ones will win, the young tigers or the rich people in Dubai.

          Here is the article:

          There is a big name behind the people who hope Nokia collapses

          Nokia shares are the most short-sold shares in Helsinki and New York. Last Friday, an updated list of the six U.S. funds have sold short more than seven per cent of Nokia shares in Helsinki and in New York over 300 million Nokia shares have been short-sold.

          Nokia short-selling funds, only one was not fund guru Julian Robertson’s younger followers. Robertson founded one of the world’s first hedge funds in 1980. The company’s name was Tiger Management, which is why the followers are called tiger puppies.

          Short seller to assume that the share price drops in the future. If the share price goes up, the value of their investment fall.

          Among them include the Blue Ridge Capital’s John Griffin, Maverick Capital’s Lee Ainslie, Andreas Halvorsen of Viking Global, and Lone Pine Capital’s Steve Mandel. All mentioned “tiger kittens” have shorted Nokia.

          Andreas Halvorsen has distributed more power to young portfolio managers.

          ABG Sundal Collier says in their report today that the Lumia 920 makes people interested in it and marks the comeback of the brand of Nokia.
          Caleb Evans

  • von

    Apple

    -buys components from manufacturers
    -has control over OS
    -wide array of products
    -Established premium brand

    Nokia

    -manufactures some of its hw
    -an OEM
    -has some services that has now made available to other platforms
    -used to be an established brand
    -Patents

    • Prasenjit Singh Bist

      With all due respect OS is a commodity now apart from UI

  • Prasenjit Singh Bist

    Nokia navigation and some secret sauce u will see in 2013

  • Bloob

    She sold me on Nintendo…

  • Ray Ray

    Very interesting discussion. A lot of key points were made. Like always, one has to look at a business from different points of view.

  • Prasenjit Singh Bist

    She made my day.. Apple on its way down Nokia Up… yes Yes Yes we will do it…

    • Tom

      You know Apple can buy and throw Nokia in trashcan with one quarter profit(not revenue). Don’t compare them. Once has trouble selling 3 minnion Lumias at $160 asp(and a loss on every handset), other can move 35 million at 3 times the asp and 40% profit margin. Apple has $100 billion+ cash and short term equities. Hell, iphone is bigger than whole of Microsoft.

  • http://sighenz.com Peter J Lennartsson

    Apple …. First smartphone. ..really? how about 1996 and Nokia ..and even phones before that from other companies.

    • viktor von d.

      they are americans, you have to excuse them

  • kornofilo

    a lot of good points, i only hope nokia realize the potential they have and smash the shit out of the other oems with new ideas… its time for nokia to take out the things they have stored in R&D and show to the world what they can do.

    • Grendell

      …its also time for Nokia to take out the things (features) they have stored in older products and show the world what they can do to WP8.

  • ms.nokia

    just to answer the article headline ….
    YES, YES IT IS A BETTER BUY THAN APPLE
    :)

    • Noki

      heee depends if you are into risk yes…

      apple is deeeeeple overvalued on the market cap.

      And Nokia is already as down as it can possibly go, unless it goes bust… It all depends what as Nokia done with its IP portfolio and how valuable it still is.

  • Abdullah

    Skip to 14:20 for Nokia talk.

    @ 16:00 since when Nokia owned that bubble?
    amazing how deep Nokia is O_O

  • Roosevelt

    The Lumia 920 is quite a better buy despite the ecosystem being low compared to Apple base upon innovative technology and price point, duh. No brainer

  • GordonH

    Nokia is nothing more then an MS OEM. Investors and developers have seen Nokia throw away it’s competitive advantage too many times. I wouldn’t trust my money with the stupid and insincere Nokia management.
    The only good point about NOK stocks are the prices are at it’s lowest.

    • incognito

      I wouldn’t throw my money on APPL either – while not a shipwreck as NOK and certainly not at any risk in the near future, they are seriously overvalued. Both are risks and suitable only for gamblers, at least in a long run – shorting can earn you a penny here and there as both will probably rise until Q1 – Apple is set to make their record sales/revenues/profit, and Nokia is as deep as it can go so the market is cutting it some slack.

      In Q1 both will probably drop significantly, with NOK possibly going under the ice – then again, if Nokia haven’t offset a large chunk of their IP portfolio (or made it, like with some MOSAID deals, beneficiary only to Microsoft), if they go under the ice the bidding war for the carcass can bring quite a nice profit. But the risk is too great for any sensible investor.

      If you’re into gambling, much better is to gamble on when will Elop be sacked, that at least is a predictable outcome ;)

      • Noki

        ++++1, we should make a betting here for wen will elop will be sacked, I say Feb of 2113 2 years after the great disaster….

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