by Vivian Lewis, editor Global Investing
The current share price of
Nokia (
NOK)
corresponds to about half its total assets, a market value of under $11
billion vs. cash and short-term investments at the same level.
For
free you get its inventory, accounts receivable, and plant and
equipment, plus a portfolio of patents offset by liabilities that are
lower than the non-cash positions. In my view, it's a steal.
The Nokia Siemens Networks telephone exchange infrastructure joint
venture beat out Alcatel Lucent in landing T-Mobile's coveted US 4G LTE
contract, sharing with Ericsson.
Nokia also launched cheaper
mobile phones, the 110, 111, 112, and 113 equipped with games and
cameras and for the 111-3, dual SIM capacity.
They will use the
cloud to smooth internet links to work well for social media. These cost
euros 35, about $42 at present exchange rates.
Nokia is lining up app developers for its Lumia windows-inside smartphones, starting with fellow-Finn Rovio (of Angry Birds).
Rovio
has agreed tp create new exclusive games for Lumia cellphones. And in
case Rovio doesn't get players hooked, Electronic Arts will develiver
different games.
Other apps will come from Groupon which is
developing location data with camera views for massing customers. PayPal
meanwhile will set up an exclusive Lumia smartphone payments process.
Dodge
& Cox manager Diana Strandberg argues for Nokia based on "a wide
range of outcomes" because of its "very low valuation" for its R&D,
its cash flow, "future earnings potential or lack", "the value of the
patent portfolio".
She also said "We ask ourselves, does
management have a sense of urgency? Do they understand the problem and
the speed they need to fix it? And Nokia management does."
She
went on: "Do they have other resources they can call on? We would point
to their partnership with Microsoft, where they have a deep-pocketed
partner contributing financial resources to the joint venture." She also
cited its distribution prowess in emerging markets. Strandberg was
interviewed by Morningstar TV.
Separately, Sprint appears to be
following AT&T in supporting the NOK Windows-inside phone. The
reasoning is that Apple wants to set up its own competing wireless
network rather than merely selling phones.
The recovery of Nokia
Siemens telephone exchanges mean the stock is worth north of $4.50 and
trades for under $3. In my view, the stock price is completely
ridiculous. I have again averaged down on the share price.