Author: Vivian Lewis
Covestor model: International Yield
Disclosures: Long NOK
T. Michael Walkley of Canaccord Genuity, the Canadian brokerage, on May 25 issued a bullish note on Nokia Corporation (ADR) (NYSE: NOK), due to coming dual-SIM products.
“We believe Nokia has a renewed sense of urgency under Stephen Elop’s leadership, and we believe Nokia’s transition to Windows smartphones remains on track to launch the first devices during the fourth quarter of 2011,” Walkley said in his note. “While the success of the Microsoft partnership is critical for Nokia’s longer-term success, we believe improved execution in its mobile phone division is also important.”
“Our checks indicate dual-SIM feature phones continue to gain share in China and India. Therefore, Nokia’s upcoming dual-SIM [Subscriber Identity Module] products scheduled for launch at the end of the second quarter are critical to stem Nokia’s feature phone share losses and an important aspect of Nokia meeting its 2011 guidance targets,” he said.
But then on June 1, Canaccord’s Walkley suddenly turned bear on Nokia, following the company’s cutting of its sales outlook. Canadians and just about everyone dropped their rating of NOK at that time. Goldman Sachs slashed it from Buy to Neutral. Sanford Bernstein, from Neutral to Underperform.
Being somewhat a contrarian, I did not dump NOK at that time, and in fact bought more. The stock now (as of 6/6/11) yields over 6%, and if the Euro rises it will yield more.
A Global Investing reader with a long-term association with Apple and its software told me he thought Nokia was “toast” mainly because it is pinning its hopes on Microsoft’s operating system replacing Symbian for its latest cell phones to hit the market by Christmas. (Apple engineers don’t think much of Microsoft and its CEO Steve Ballmer. The reader sure doesn’t.)
I live in NYC where a major hedge fund manager, David Einhorn, also has called for Ballmer to resign.
But then, Einhorn proved that my softness over Nokia is not unique; he bought a piece of the most non-professional professional NYC baseball team, the Mets, maybe because it was cheap. Well, Nokia is cheap too.
Sources:
“Nokia-Microsoft partnership keys in on China, India markets” Eric Lam, 5/25/11 Financial Post http://business.financialpost.com/2011/05/25/nokia-microsoft-partnership-keys-in-on-china-india-markets/
