Nokia (NOK)

People don’t hear much about Nokia for a reason. He has stayed away from companies that build legacy wireless infrastructure because of the transition to 5G. 5G wireless is more dependent on software, on the configuration of the local network nodes, and on the needs in the local area. 5G will displace landlines. Because development and deployment requires so much precision work, you have to get into metrology to do it. He prefers Keysight, the old HP, in this space. Keysight will provide the tools for the service providers, who will otherwise rely on generic hardware.

A very interesting company. Lost their phone business and had to rediscover themselves. Went into a deal with Lucent. They are moving along nicely, it is just a very slow process. Business can be very lumpy and volatile. There are a lot of better stocks to own.

The difficulty with this company is that it is kind of similar to the way Blackberry (BB-T) is now. When you stumble, it is really hard to recover when the competition is as fierce as it is. He would rather go with something else, such as Apple (AAPL-Q).

(Market Call Minute) There is a lot of uncertainty still with respect to the synergies with their acquisition of Alcatel.

Microsoft is no further ahead on the mobile side for acquiring this one. NOK-N got a decent price for the handset business. There are better places on the tech side to be. However, they are debt free and just might make this thing work.

They sold their cell phone business to MSFT-Q. NOK-N management did a good job of restructuring it. They have good products and good growth. CAP-X on telecom will increase going forward. There will be a lot of volatility on the numbers and you have to be patient.

Nokia vs Vodafone Two very different companies, Nokia is no longer in the phone business. But might sell stuff to Vodafone. Vodafone has assets around the world, have gone into wireless and cable business. Nokia probably has more upside due to restructuring.

The market did not like the deal. He knows an analyst that actually really likes this deal because NOK-N can bring out 900M Euros of value. The stock could be a really strong performer.

They can’t afford high margins. This is a trader’s stock.

Recently got approval from the Chinese government for the sale of their handset division to Microsoft (MSFT-Q). A company like this is not in his sweet spot. It’s a Value play. If you are a Value investor, you do a much different kind of analysis than he would do. For a growth investor like himself, he would be looking at the income statement rather them the balance sheet and he doesn’t see a lot of potential on the income side of things. They are in a very competitive market.

Speculative category. You have to know what their new products are and will they compete on a global basis with LG, Apple, BB, etc. He would not chase it. At $4.50 to $5 he would be more interested.

Recent gain is connected with the tie up with Microsoft (MSFT-Q), a one-time catalyst. Struggles to see this continuing so if you own, he would move on.

Will not come back to its glory days, same thing for Blackberry. Does not own Apple or Samsung either. Smart phones in China are $30. Prices are only going to come down.

This is a lesson to be learned. When companies start to get commoditized and are paying a high dividend, and the cash burn starts to pick up, the next thing to go is the dividend. Once the dividend is cut, the stock is going to get hammered. A purchase here is more like a roll of the dice.