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Thursday, January 22, 2009


Nokia (NOK)


Nokia reports. Current quarter devices miss estimates by ~4 mil at 113 mil, operating EBIT significantly weaker at 12% vs consensus closer to 15.5%, offset somewhat by stronger infrastructure sales. Handset guidance is down 10% for the full year 2009. They expect the decline to be greater in the first half than the second half. Previously the company had stated expectation of down 5%ish for 2009. Inventories are down over 20% q/q with ASPs down roughly a euro to 71.


The Skew: Down inventories is a good thing. Nokia's full year industry estimate may look aggressive in the weaker first half they're suggesting. Operating margins need to bottom for stock to work. Probably will happen in Q1/Q2.




Quality Systems (QSII)


Some number cuts and a downgrade on the back of Eclipsys (ECLP) blowing up last night. Stock has been strong on anticipated healthcare stimulus from Obama. Might happen. Problem in my view is their balance sheet – DSOs very high. There have been questions raised about revenue recognition, too. Short interest is higher than I like but my experience is balance sheet issues pay off long-term on the short side.




Apple Computer (AAPL)


Just a further footnote... and a more positive one than the grouchy one I wrote last night. On a sequential basis, non-GAAP revenue rose slightly but non-GAAP EPS fell. As Apple only began releasing non-GAAP numbers last quarter, there's not enough comp to draw much conclusion from it. The deferred revenue figures suggest iPhone gross margins significantly higher than the corporate average – the ASP appears to be roughly $600 with a gross margin of approximately 45-50%, according to a couple of estimates. Theoretically this will be a positive kick to margins going forward as the corporate average is mid 30s presently.









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