We're seeing a period of stagnation in the phones market with Apple and Nokia is the leaders, they are now attempting to cut costs to post reasonable gains in the next few months. You can see this with Nokia's R&D unit being transferred to India. I had a target of 28 with a timeframe of 6 months from January 2007, and we can see that they hit right on the mark and have stayed there since. I expect them to hold this 27 to 29 mark for the next few months. Hopefully their Indian R&D move helps them come up with something new, but that will be at least 6+ months from now. This is a cost cutting measure and we can expect to see some small gains in profit due to them cutting operating expenses and increasing their margins as manufacturing becomes streamlined. They already have most of their phones and devices using the same charger now, and their device synergy will help them increase their net profit margin from 9% to 12% or more. The risk comes from upstart phone manufacturers, or existing manufacturers making new deals with phone carriers. The IPhone has many phone manufacturers rethinking their designs. I expect to see some new entrants to the cellular market in the near future, and if they start to take off, we'll see them take the market share away from NOK faster than APPL.
$27.72 (06/02/08)
