Wednesday 24 April 2013

Analysis of Nokia

A Finish telecom company

Company: Nokia

Business: Mainly mobile phones. It is not true but that is even what they push on the investor page so then I will stick to that.

Active: They are fully active globally. Their best markets are the "developing" part of the world just like Blackberry.

P/E: -2.3

Nokia, Nokia, Nokia, how far can one star fall in a very short time IN the field of technology. Should we learn something due to Nokia, Blackberry, Apple? Are they dangerous stocks? Due to losses they have a negative P/E number. their P/B is low but close to acceptable. Their book to debt is also fairly high but still not like Sony. They had a negative growth of almost 10% for the last five years. That is bad! And of course, as it must be, they pay no dividends. However... their last reported quarter showed earnings. Was that a fluke or have they managed to get over the first hurdle? I do not know. I went today to a mobile phone store to check out not only Lumia 920 but also to work a little with Office 8 and I was not unhappy. The Lumia was responding directly on anything I did. I also tried the Blackberry which was slower and I think I need to read some manual to figure out how to operate it but still Lumia was excellent. (Small remark... In the same store almost no one was at the Apple section. Have they become too boring?)

Conclusion: I would definitely not buy Nokia today. But I would strongly observe the next two quarter reports. If also they are positive then Nokia has turned it around and it will be a good stock to own.


Anonymous said...


Any chance to update this? What are your thoughts on the D&S sold off?

Fredrik von Oberhausen said...

Hi there,

thanks for your comment! Since I only look at the yearly report for the analysis it does not yet make a sense to make the update.

The biggest difference is that the stock price have gone from 2.33 to 5.25 so an increase with around 225%. This also means that most values just should be multiplied with a factor of 2.25.

If I would have been an old Nokia shareholder then I would have been very angry with what happened in Nokia.

Elop arrives from Microsoft and swaps their entire business to Microsoft, buy out Siemens for the telecom infrastructure part (so that Nokia get a new own business), then sells the mobile phone part to Microsoft with a significant discount (as I understood it) on the patents and patents leases before Mr. Elop himself starts working for Microsoft once again. I would have been very angry!

All the shareholders that bought Nokia down at 2.3 € must be very happy today.

The future of Nokia... no clue... it is a tough market that they have to step out on (even though they are leaving a super tough one behind) just look at Ericsson and how they are being pushed by the Chinese companies even though they have, besides form having excellent products and services, been lucky enough that US is stopping some of the contracts due to strange reasons.

Either way, I have no clue how Nokia will do in the future and I would probably like to see the yearly report from 2013 as well as 2014 before I would make a decision how Nokia is doing. If I understood things correctly they will even be allowed to build their own mobile phones again in a couple of years... will they do that?

There are just too many question marks and even though I do believe that they will be successful as a turnaround company I want to see it in the books before I step in.

I don´t know if that answered your question as well as you wanted but I hope the answer is in there somewhere.