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No. of Recommendations: 2
Warning ... Long Post Ahead!

Panhale's recent Rule Maker Ranker posts on Nokia 
reminded me that I had also done one on them for third
quarter and had neglected to post it.  I also used the
same competitors that he had used on his second post
(MOT and QCOM).  I would liked to have used ERICY as 
well, but the format of their quarterly results makes
it almost impossible to translate into our spreadsheet.
I guess we just have to wait for the annual numbers to
add them to the mix.  Now on with the numbers:

Financial AnalysiCompany Being Evaluated                        Competitor #1  Competitor #2 Competitor #3

                     Nokia                                        Qualcomm        Motorola
                     (NOK)                                         (QCOM)          (MOT)
                 Current PeriodYear-ago PerioYear-over-Year    Current Period  Current PeriodCurrent Period
                      99Q3          98Q3         Growth             99Q4            99Q3         <Date>
Income Statement . . .
  Sales                  5,223         3,500      49.2%                  1,060         7,688
  Cost of Goods S        3,282         2,122      54.7%                    621         4,601
  Net Income               662           481      37.5%                    136            91
  Shares Outstand        1,185         1,176      0.8%

Balance Sheet . . .
  Cash & Equivale        3,455         2,342      47.6%                  1,614         3,527
  Current Assets         9,963         6,860      45.2%                  2,978        16,015
  Short-term Debt          469           521     -10.0%                    115         1,495
  Current Liabili        6,059         4,024      50.6%                    876        11,898
  Long-term Debt           285           174      63.7%                      1         3,598
                                                                              1             1             0
Margins & Ratios . . .                                                                                     Competitors' Average
  Gross Margins           37.2%         39.4%     -2.2                    41.4%         40.2%                   40.8%
  Net Margins             12.7%         13.7%     -1.1                    12.8%          1.2%                    7.0%
  Cash-to-Debt             4.58          3.37     36.0%                   13.91          0.69                    0.99
  Net Cash               2701.4        1646.8     64.0%                  1498.0       -1566.0                   -34.0
  Fool Flow Ratio          1.16          1.29     -9.7%                    1.79          1.20                    1.50

                 Continue Here

Ranking Rule Makers

1) Brand          Points (0-1)                                3) Financial Dire Points (0-3)
Familiarity                   1                               Sales Growth                  3
Openness                      1                               Gross Margins                 1
Optimism                      1                               Net Margins                   1
Legitimacy                    1                               Shares Outstandin             2
Inevitability                 1                               Cash-to-Debt                  2
Solitariness                  0                               Fool Flow Ratio               2
Humor                         1                               Expansion Potenti             3
  Subtotal                    6                                 Subtotal                   14

2) Financial Loca Points (0-2)                                4) Monopoly Statu Points (0-4)
Mass Market Habit             0                               Gross Margins                 0
Gross Margins                 0                               Net Margins                   4
Net Margins                   2                               Net Cash                      4
Cash-to-Debt                  2                               Fool Flow Ratio               2
Fool Flow Ratio               1                               Convenience                   2
Your Interest                 2                                 Subtotal                   12
  Subtotal                    7
                                                              5) Your  Enjoymen             1

                   Total Score             40  Second Tier

Nokia loses points in my analysis in the following 

1)  Solitariness - With competitors such as Qualcomm,
Ericsson, and Motorola, I honestly can't say that Nokia
is the clear-cut category king.  

2)  Mass Market Habit - I just can't see someone buying
new cell phone equipment once a year or even more 
frequently.  I'm sure there are some that do, but I 
don't think this represents the vast majority of their

3)  Gross and Net Margin trend - Both figures slightly
declined from the figures they posted in 98Q3.  When
comparing the numbers from 99Q3 to those for the first 
nine months of 1999, the decline doesn't look quite as 
severe (38.2% to 37.2% for gross margins, 12.9% to
12.7% for net margins), but it still represents a 
disturbing trend.  Is this a one quarter hiccup, or a 
warning of things yet to come?  Stay tuned.

4)  Margins vs. Competitors - While Nokia's margins 
have slipped slightly, those of its competitors have
been on the rise.  Qualcomm numbers are climbing quite
nicely as a result of its CDMA licensing revenues, 
which represent 90% of the company's profits in the 
most recent quarter.  I fully expect this trend to 
continue for QCOM.  I'm no expert on Motorola, but I
was surprised at the improvement in their financials
from my last analysis at the end of 1998.  If their
competitors continue to post numbers like these, I 
believe NOK will have a tough time earning points in 
this category.

5)  Convenience vs. Competitors - Just as in the 
Branding category, I have a hard time saying that NOK
is the best in its industry.  Therefore, I can't give
it more than two points here.

Now before I give everyone the idea that I am "bearish"
on Nokia, I must admit that I am a big fan of this 
company and a current participant in their DRP.  I 
believe that their position in the DSL arena as an 
equipment supplier should really begin to start paying
HUGE dividends in the next few years as people begin
moving away from standard dial-up access to broadband. 
For more information on their position in this growing
market, check out the following link:

Something tells me that the numbers for NOK will 
improve before the next earnings release, plus the 
inclusion of ERICY as a competitor should help their
overall score as well.  In any event, I plan on 
keeping a close watch on this company in the near 

Fool On!

the LanceMan
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