Tag Archive | "phone"

Nokia Continues Slide: Three Downgrades; Moto Death Spiral?

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Nokia (NOK) shares continue to fall this morning as the downgrades pour in following the company’s cut in its outlook yesterday.

I count three downgrades today, in all, from Goldman Sachs, Sanford Bernstein, and Canaccord Genuity.

As I wrote following that announcement, the bears warned that the worst may not yet be over in terms of the deterioration of the existing business, and that the partnership to develop phones with Microsoft (MSFT) still carries risk.

That’s generally the viewpoint of today’s actions as well. I’ll get to the Goldman and Bernstein notes in a moment.

Mike Walkley at Canaccord Genuity cut his rating to Hold from Buy and cut his price target to $8 from $11, writing that he is “increasingly concerned about sales for Nokia’s Symbian devices during the transition period.”

The vaunted Nokia distribution channel has in fact broken down in China, the company indicated, and the head of operations there has been let go. “Nokia indicated it had mismanaged inventory levels in China and has fired and replaced the head of its China distribution operations.”

Walkley cut his 2011 EPS estimate to $20 cents from 54 cents, and cut his 2012 EPS estimate to 28 cents from 83 cents, but he still thinks Nokia’s phones based on Windows Phone could become a viable third platform, after Apple’s (AAPL) iOS, and Google’s (GOOG) Android, and he models a profit of 83 cents in 2013, on a rebound in sales to €44.9 billion from a likely €39.7 billion in 2012.

Bernstein’s Pierre Ferragu, meanwhile, cut his rating from Market Perform to Underperform, with a $4 target price on the American Depository Receipts, down from $7.33 previously. His target price on Nokia’s ordinary shares goes to €3 from a prior €5.50.

Ferragu notes that he had upgraded the stock on March 11th, when there were 13 Sell ratings on the Street, thinking that investor expectations were low enough to offer some upside on the shares. But yesterday’s cut means the “worst case” scenario that he had imagined is, in fact, crystalizing.

The introduction of the Windows-based phone “will be challenging,” he thinks, “given the likely loss of traction and visibility of the Nokia brand, as well as the speed at which the opportunity for a third ecosystem to emerge is vanishing.”

In fact, Ferragu thinks something is happening to Nokia akin to what befell Motorola back when it lost its grip on the number two spot in the phone market:

This new guidance is to us a strong indication that the company is falling into the Motorola-type scenario we have been worried about for some time. We expect Nokia’s smartphone and mobile phone shipments to shrink sequentially in the second quarter, leading to market shares of 19% and 30%, down 19 pts and 5 pts year on year. This precipitous acceleration of market share loss has two major implications. Nokia is now losing visibility in Europe. The brand lost its first spot to Samsung in the first quarter and our recent store visits indicated a dramatic loss of visibility for Nokia: In some stores, we couldn’t see Nokia phones on display above knee level. Nokia’s emerging market share is not well protected. It now seems clear that Nokia’s more stable position in emerging markets and especially in China was artificial. Management advocated that major inventory build-ups artificially increased shipment volumes in the last quarters. We now believe Nokia will face pressure in these markets similar to what it has been experiencing in Europe.

Goldman’s Tim Boddy cut his rating to Neutral from Buy, writing that the company’s “rapid market share loss threatens Nokia’s distribution advantage.”

Boddy writes that his prior convocation that the stock offered upside if new Windows phones succeeded failed to anticipate how quickly the business would deteriorate.

“With Nokia unlikely to have a full Microsoft- based smartphone line-up across all price points before mid-2012, risks to revenues remain material, threatening Nokia’s ability to retain its distribution relationships and retail footprint when new products arrive.”

Boddy cut his EPs estimate for this year to 17 cents from a prior 53, and cut 2012′s estimate to a loss of 1 penny, versus a prior estimate of 70 cents per share.

And like Ferragu, he draws parallels with the old Motorola’s troubles when it lost its position in phones:

We believe the parallels between Nokia’s situation and Motorola in 2007/8 are becoming more similar. We still argue that Motorola’s position was more precarious, given its dependence on a slim number of high end ‘hit’ models for its profitability, a structurally unprofitable EM business and a weaker balance sheet, but a clear lesson from Motorola’s challenges (or, for that matter, Sony Ericsson’s) is that it is both difficult and time-consuming to rebuild distributor, retail and supplier confidence in your brand once market share has collapsed.

Things that were an advantage for Nokia, moreover, such as in-house manufacturing, may come to be a liability, Boddy believes. For one thing, of the company’s 59,000 employees in its handset operations, about half are based in developed markets. That might make it tough for the company to restructure if it wanted to shift resources to emerging markets where the upside is greater.

Article courtesy of Tech Trader Daily

Nokia: Gleacher, ThinkEquity Cut Numbers; Look To MMI, RIMM

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Estimates are starting to trickle in for what Nokia’s (NOK) cut in forecast this morning actually translates into. Gleacher & Co.’s Stephen Patel and Brian Marshall estimate that Q2′s sales will now be $13.7 billion, down from last quarter’s $14.1 billion, yielding EPS of 3 cents. That’s down from a prior estimate of $14.6 billion in revenue and 16 cents EPS.

Patel and Marshall maintain a Neutral rating on NOK and a $6.50 price target.

Patel and Marshall cut their year outlook to $57 billion in revenue from a prior $61.7 billion, and to 37 cents in EPS from a prior 76 cents. They cut their 2012 outlook as well, to $58.5 billion from $62.5 billion previously estimated, and to 46 cents in EPS from 78 cents.

Certainly, at 37 cents this year, or 46 cents next year, Nokia shares look more expensive, even after the drop today, at 19 times or 15 times projected earnings, versus the 9 times they would be trading at using the prior estimates. However, that’s not including the cash per share Nokia holds.

The analysts express concern the Windows-based unit won’t be sufficient to lift the stock: “We remain concerned that [Windows Phone 7] industry sales remain below 2mil units/quarter and that NOK’s scale will not be enough to offset a faster than expected drop-off in Symbian phone sales, which are still about 50% of revenue and roughly 20mil units/quarter.”

With even cheaper shares to be had in Research in Motion (RIMM), and Motorola Mobility (MMI), there’s not much support for Nokia stock, in their view: “Competitors RIMM and MMI trade at around 6x and 7x CY12 EPS excluding cash, which would put NOK at ~$5.50/share based on 6.5x our CY12E EPS plus ~$2.40/share cash, though NOK has typically traded at a premium. Our $6.50 target is based on 8.5x CY12 EPS plus cash.”

Nokia shares are down $1.22, or 15%, at $6.97, perhaps having reached a level of support for the moment.

Update: Mark McKechnie of ThinkEquity reiterates a Hold rating this afternoon and a $7 price target. He cut his Q2 estimate to $13.4 billion in revenue and a penny in EPS, from a prior $14.2 billio and 13 cents in EPS. For the full year, he cut his revenue estimate to $56.5 billion and 28 cents EPS, from a prior $59.9 billion and 60 cents EPS.

Article courtesy of Tech Trader Daily

Microsoft Shows Win Phone ‘Mango,’ Coming To Nokia

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Microsoft (MSFT) this morning offered up the latest iteration of its “Windows Phone 7″ operating system for smartphones, dubbed “Mango,” which the company promises will make smartphones “smarter and easier,” while adding 500 new features.

The software is expected to be available this fall, Microsoft said.

Engadget’s Tim Stevens, among others, is dutifully chronicling the debut event this morning.

Some of the initial points Microsoft is hammering on: It’s about people you connect with, not about “apps.” The “live tiles” — little squares that appear on the home page of the screen — have updates of developments surfacing on Twitter, LinkedIn (LNKD), and other information sources. Things like seeing people’s “profile pictures” as soon as they’re updated. A “groups” features automatically pulls together photos and other info for individuals you choose to associate together.

Microsoft is also demonstrating a smarter keyboard, with phrase completion. Different threads of conversation, such as Facebook and text messages, can be grouped together, the company said.

Microsoft said the software will be the first code it puts on the first phone developed in partnership with Nokia (NOK).

Microsoft shares are up 6 cents at $24.23.

Update: Business Insider’s Ellis Hamburger offers a video from the event that shows how Mango will perform multi-tasking functions. It is curiously similar to the “card view” used by Palm OS to jump between applications.

Article courtesy of Tech Trader Daily

How To Destroy Evidence Of Insider Trading: Lesson 3

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If you’ve been closely following the government’s Insider Trading Fest(ivus) 2010/2011 you know that one thing that’s emerged is a detailed guide to how one should go about destroyed evidence of securities violations that a jury would not look upon kindly. Garrett Bauer spoke to us at length about the benefits of washing versus burning dirty money while Donald Longueuil, the foremost expert on the matter, provided a step-by-step guide to getting rid of incriminating USB drives (you’ll need: two pairs of pliers, four plastic baggies, one North Face fleece). Yesterday, an (alleged) accomplice of (accused) insider trader/former Galleon employee Zvi Goffer added a chapter on getting rid of a cell phone that could cause trouble.

Santarlas, testifying under a cooperation agreement with the government, said he and another former Ropes & Gray attorney, Arthur Cutillo, told Brooklyn, New York, lawyer Jason Goldfarb in 2007 about acquisitions involving 3Com Corp. and Axcan Pharma Inc. He said Goldfarb gave him $25,000 for the 3Com information and $7,500 for Axcan.

“When I received the cash, Jason had told me to dispose of the phone — break it in half, submerge it in water and put it in a garbage can,” Santarlas testified.


Earlier: If You’ve Ever Wondered What Donald Longueuil Might’ve Sounded Like On The Cold December Night He Told A Colleague How To Destroy Evidence Of Insider Trading, Wonder No Longer (MP3)

Article courtesy of Dealbreaker

Google Talks Ice Cream Sandwich, Project Tungsten

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While Microsoft (MSFT) this morning was explaining its $8.5 billion bid for Skype, Google (GOOG) was hosting an event in San Francisco called “I/O“, during which the company made several announcements pertaining to its mobile devices.

Total activated “Android”-based mobile devices now number 100 million, the company said, with 400,000 being turned on every day. There 200,000 “apps” available for the devices, the company said, of which 4.5 billion installations have taken place on Android devices.

The company plans later this year to introduce the next version of Android for phones, dubbed “Ice Cream Sandwich,” which will incorporate “everything you love” about the company’s “Honeycomb” version shipping on tablets, such as Motorola Mobility’s (MMI) “Xoom.” That includes the “holographic” user interface.

Similar to Amazon.com’s (AMZN) hosted music service, Google started up today the beta version of its music site, to let Android users upload their music collection and stream it to the phone. The company also started rentals of movies to users of the Xoom today, with availability for Android version 2.2 users “in coming weeks.” The rentals are priced at $1.99.

Google also said it formed a committee of handset makers and service providers to to coordinate when devices are updated with the last Android software and for how long those devices will continue to be updated. Verizon Communications (VZ), Samsung (SSNLF), HTC, Sprint-Nextel (S), Sony Ericsson, LG Electronics (LGERF), Vodafone (VOD), T-Mobile, Motorola, and AT&T (T) are among the initial committee members.

Google unveiled something called “Android @ Home” that will let Android-based devices control devices in the home. Part of that is a blueprint for a kind of home “hub” or server for connectivity, called “Project Tungsten.” In a demo at the conference, Google showed how a music CD with a wireless tag placed in front of a receiver can suck all the songs off the CD and start playing them back over the network.

Google shares today are up $5, or almost 1%, at $542.68.

Article courtesy of Tech Trader Daily

No Off Button: Apple’s iPhone Stores Data When Locations Services Disabled

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As ‘Locationgate’ continues to unfold, the Wall Street Journal is reporting today that Apple‘s (AAPL) iPhone stores users’ locations even when the service is turned off.

The Journal’s tests found that the information seems to be collected via cellphone towers and Wi-Fi access points near a user’s phone, but doesn’t  appear to be transmitted back to Apple.

However,  the fact remains that the iPhone is collecting and storing location data even when users have actively chosen to turn off location services, highlighting how little control they have. This comes after last week’s revelations that Apple keeps a database of where users bring their iPhones, and that operating systems by both Apple and Google (GOOG) transmit location information back to the companies. Some members have Congress have also been calling for an investigation into the matter.

The Journal describes the tests as follows:

Reporters disabled location services (which are on by default) and immediately recorded the data that had initially been gathered by the phone. The Journal then carried the phone to new locations and observed the data. Over the span of several hours as the phone was moved, it continued to collect location data from new places.

These data included coordinates and time stamps; however, the coordinates were not from the exact locations that the phone traveled, and some of them were several miles away. The phone also didn’t indicate how much time was spent in a given location. Other technology watchers on blogs and message boards online have recorded similar findings.

Article courtesy of Tech Trader Daily

Apple, Google Phone Home, Says WSJ

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This is the other shoe dropping.

Following a revelation earlier this week by programmers that Apple’s (AAPL) iPhone maintains a database on the device of the locations an individual has traveled with the phone, The Wall Street Journal’s Julia Angwin and Jennifer Valentino-Devries write today that both Google’s (GOOG) and Apple’s operating systems are transmitting some location data back to the companies.

“According to new research by security analyst Samy Kamkar, an HTC Android phone collected its location every few seconds and transmitted the data to Google at least several times an hour,” the authors write.

(Kamkar, a convicted computer felon, maintains a Web site here. The Journal used a consultant to test Kamkar’s research, and apparently he verified the findings about the Android OS.)

As for Apple, the authors cite a letter the company sent last year to representatives Ed Markey, Democrat of Massachusetts, and Joe Barton, Republican from Texas, saying it, “‘intermittently’ collects location data, including GPS coordinates, of many iPhone users and nearby Wi-Fi networks and transmits that data to itself every 12 hours.”

As the authors note, there are some specific limitations. For example, Apple’s data on locations transmitted back to its data centers is not tied to a phone’s unique identification code. Google’s process, Kamkar’s work suggests, includes data gathering and transmittal that is tied to the phone and that proceeds even when the phone’s apps are not explicitly requesting network location.

Article courtesy of Tech Trader Daily

Apple: Retail Staff Asked To Stay In May, Says PC World

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Hold the phone.

With all sorts of speculation about the time frame for Apple’s (AAPL) next iPhone — probably September, folks think — PC World’s Ben Camm-Jones this morning writes that Apple retail store staff have been asked not to take vacation between May 20th and May 22nd. May 19th is the tenth anniversary of Apple’s retail stores.

That suggests, Camm-Jones writes, a week-long special event may be planned, though he wonders if it may include new product as well.

I would imagine the timing of a commemorative event will not be mixed with a new product introduction, iPhone or otherwise. But you never know.

Article courtesy of Tech Trader Daily

Apple: Verizon Looking Forward To ‘World’ iPhone

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During a conference call with analysts this morning to discuss Q1 results, announced this morning, Verizon Communications (VZ) management remarked that the next version of Apple’s (AAPL) iPhone will be a “world phone,” capable of working with other carriers’ networks.

Verizon CFO Fran Shammo, asked about the sluggishness of the company’s ARPU growth in Q1, when the iPhone was introduced — growth was just 2.2%, compared to 2.5% in Q4, remarked:

The fluctuation, I believe, will come when a new device from Apple is launched, whenever that may be, and that we will be, on the first time, on equal footing with our competitors on a new phone hitting the market, which will also be a global device.

The iPhone 4 that Verizon carries, based on the “CDMA” technology standard, does not have nearly as broad support by network operators throughout the world as does the “GSM” standard used in the AT&T model of the phone, which Apple sells in numerous countries throughout the world.

Apple COO Tim Cook said during Apple’s conference call last night that Apple had signed only two other carriers in the world to use the CDMA iPhone, SK Telecom in South Korea, and Saudia Arabia’s Saudi Telecom. Cook said Apple was considering other carriers to whom it might distribute the CDMA unit. But a world phone at Verizon, presumably using the 4G standard dubbed “Long Term Evolution,” would allow Verizon to sell a phone that can roam on networks in Europe and other parts of the world just as AT&T’s model does.

That would presumably be of special interest given that Vodafone (VOD) in Europe owns a stake in Verizon’s wireless business.

Article courtesy of Tech Trader Daily

Verizon Slips: Q1 In Line; 2.2M iPhones Activated

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Shares of Verizon Communications (VZ) are down 54 cents, or 1.4%, at $37.25, after the company reported Q1 revenue and earnings per share slightly ahead of analysts’ estimates.

Q1 revenue rose 0.3%, year over year, to $26.99 billion, just a hair above analysts’ average $26.86 billion estimate. EPS of 51 cents per share was a penny better than expected.

Verizon said its wireless business added 1.8 million customers, excluding acquisitions, for a total of 104 million “connections.” Wireless service revenue rose 6.3%, and data revenue was up 22.3%, the company said. Retail postpaid churn was 1.01%, Verizon said, while total retail churn was 1.33%, both improvements from a year earlier, the company said.

Verizon activated 2.2 million of Apple’s (AAPL) iPhone 4 after the device went on sale at the beginning of February. The company had to deal with some slowing of its ARPU growth, at just 2.2%, as customers held off on purchasing other products in advance of the phone’s introduction, Verizon said. But ARPU growth rose to 2.8% exiting the quarter.

Operating cash flow of $5 billion was lower than the $7 billion booked a year earlier as promotions for the iPhone 4 ate up cash, Verizon said.

CEO Ivan Seidenberg remarked that Verizon, “are executing on our business plans and building momentum, and we are on track to meet both our revenue and earnings objectives for the year.”

Verizon will hold a conference call with analysts at 8:30 am, Eastern this morning, which you can listen to here.

Article courtesy of Tech Trader Daily