Nokia Gains 22% Even As It Bleeds Share Outside Of Emerging Markets

Trends aren't good

Nokia, which competes with Apple, Research in Motion and Motorola in the mobile phone market, has lost share in developed markets like the U.S. and Europe over the past few years.

We believe the market share loss was caused by insufficient focus on customer needs, delays in introducing new operating systems, and incompatibility with networks of telecom operators. We expect Nokia’s share in developed markets to fall further over the coming years.

Despite weakness in the company’s developed market growth prospects, we maintain a price estimate of $12.44 for Nokia, roughly 22% ahead of market price. Nokia generates an estimated 53% of its value from emerging markets (vs. 17% from developed markets), limiting the impact of downside to its developed market operations.

Insufficient Customer Focus

Nokia has struggled to match the evolving needs of U.S. and European consumers, as its mobile phones have often fallen short of customers’ customization preferences. In addition, Nokia was late in launching touch screen phones, allowing its competitors to take advantage of a head start into this lucrative market.

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Nokia’s phone design has also drawn criticism. Demand for thin and lightweight phones has been on the rise over the past few years, but Nokia was unable to successfully implement these features in its phone design.

Operating System Release Delays

Symbian 3, Nokia’s enhanced version of mobile operating system (OS) due for launch in Q2 of 2010 was delayed by three months. (1) The Symbian 3 launch represented a real opportunity for Nokia to compete with leading phones like the iPhone and Blackberry, as it had highlighted improved features like multi-touch, fast flip scrolling and free navigation software. Unfortunately, these delays only hampered Nokia’s brand image.

We’ve previously written that Nokia’s N8 smartphone, its first to run Symbian 3, will likely produce minimal upside to our base market share projections. (Can Nokia’s N8 Smartphone Boost Market Share)

More recently, Nokia also announced the delay of its new E7 smartphone, which will now debut in early 2011. (2)

GSM Struggles

Having seen success in the emerging markets with its GSM based mobile phones, Nokia tried to repeat the effort in developed markets as well. However, the majority of telecom operators (Verizon, Sprint) in the US use the CDMA network, and hence Nokia’s GSM-based phones were not compatible with these telecom operators.

Nokia’s Share to Decline in Developed Markets

We estimate that developed markets constitute around 17% of the $12.44 Trefis price estimate for Nokia’s stock. We believe that Nokia will continue to struggle to stand its ground amid the onslaught of competitors in these markets, and project a decline in the company’s market share from around 27% in 2009 to under 20% by the end of the Trefis forecast period.

You can modify our forecast above to see how Nokia’s stock value would be affected if its share in the developed markets were to revive.

You can see the complete $12.44 Trefis Price estimate for Nokia’s stock here.

Notes:

1) The Wall Street Journal: After Delay, Nokia Ships New Smartphone

2)?The Wall Street Journal: Nokia Delays E7 Smartphone Release

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Gilani seeks support from opposition

Gilani meets Shahbaz Sharif and calls on Chaudhry Shujaat in a frantic effort to make new allies. PHOTO: AFP

ISLAMABAD:?Prime Minister Yousaf Raza Gilani met with Punjab Chief Minister Shahbaz Sharif on Monday in what analysts describe as a desperate bid to shore up support and make new allies following the MQM’s announcement of its defection to the opposition benches in the Senate and the National Assembly, which has stripped the Pakistan Peoples Party (PPP) of its already slender majority in the parliament.

Gilani telephoned Pakistan Muslim League – Quaid (PML-Q) leader Chaudhry Shujaat Hussain early Monday morning seeking his support following the Muttahida Qaumi Movement (MQM’s) decision to sit on the opposition benches. Gilani is expected to meet the PML-Q leader later today.

The ruling PPP has 125 members in the National Assembly, 47 short of simple majority to keep the government in office. It has support from Awami National Party (ANP) with 13 lawmakers, five from the Pir Pagara-led Functional League and around 17 independent members. The PPP?needs at least 12 seats to survive and the prime minister is expected to talk about the possible alliance between PPP and?PML-Q in today’s meeting.

Gilani faces an imminent no-confidence motion in the National Assembly, forcing the PPP to look for new allies. According to an earlier report in The Express Tribune, the PML-Q, which is the second largest opposition group with 51 seats in the National Assembly, said it will not move the no-confidence motion against Prime Minister Gilani.

Express 24/7 reported that Shujaat said they will?listen to Gilani?and then consult other party leaders before reaching a conclusion.

PML-Q, JUI-F hold meeting in Lahore

Meanwhile, PML-Q and Jamiat Ulema-e-Islam-Fazal (JUI-F) held a meeting in Lahore to discuss their future course of action. Addressing a press conference after the meeting with Chaudhry Shujaat, JUI-F leader Maulana Abdul Ghafoor Haidri demanded the resignation of Prime Minister Gilani saying that it was better for him to resign with all his cabinet.

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Benazir murder case: Accused police officials submit bail application

Counsel of detained officers submits application saying the two men are innocent.

The detained policemen in the Benazir Bhutto assassination case, former City Police Officer (CPO) ?Rawalpindi Saud Aziz and Superintendent Police (SP) Khurram Shahzad, have filed a bail application in the Rawalpindi Anti Terrorism Court that has been hearing the case.

The counsel of the detained police officers took the stance in the application that the?two men?are innocent. He argued that the Joint Interrogation Team of Federal Investigation Agency (FIA) has found no direct evidence against them.

Saud Aziz and Khurram Shahzad are on a judicial remand after the FIA’s request for an extension in the physical remand was rejected last week.

The?FIA has been?ordered to present them before the court on January 7, when the bail application will also be heard.

Earlier, the legal counsel for former CPO, Waheed Anjum had claimed while addressing a press conference in Rawalpindi that his client was being victimised by his portrayal as the killer of Benazir Bhutto as the allegations against him were yet to be proven. He had said that the allegations levelled against the former CPO were baseless and that both the accused were public servants and did not have links with any political factions.

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SAP Tags $60 Stock Price By Hanging On To CRM Market Share

Big upside ahead

SAP stills holds the number one position in customer relationship management (CRM) software market with an estimated share of around 23%. (1) However this share has declined gradually due to increased software-as-a-service (SaaS) offerings from companies like Advanced Micro Devices, Salesforce.com and Oracle.

While we expect SAP’s share to decline to 18% by 2017, the Trefis community predicts flat market share in the 22% to 23% range, corresponding to an upside of 5% to our price estimate for SAP’s stock.

We currently have a Trefis price estimate of $57.49 for SAP’s stock, about 15% above the current market price.

Increasing Adoption of SaaS

Companies like Salesforce.com and Microsoft have increased their SaaS offerings which work on the on-demand principle. With SaaS, enterprises can license only the amount of software required versus the traditional way of procuring the license per device. The service is provided through the Internet and the actual data and IT infrastructure resides with the host rather than the client. Hence the client does not need to bear extra cost of infrastructure and can also start using the solution immediately. SAP has also been slow in adoption of SAP Business ByDesign, a SaaS offering.

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Positive Results from Oracle’s Acquisition of Siebel

Oracle acquired Siebel in 2006 for its CRM offerings. Oracle could not immediately benefit from this acquisition due to the time required for the expected synergies to fall in place and struggled to increase its market share. We expect that Oracle would now be in a position to start benefiting from Siebel’s acquisition, adding another threat to SAP’s supremacy in the CRM market.

Trefis Community Forecast

The Trefis community forecasts that SAP’s market share in customer relationship software will remain within a range of 22% to 23% through 2017, compared to the baseline Trefis estimate of a decrease from 21% to 18% during the same period. The community estimates imply an additional 5% upside to the Trefis price estimate for SAP’s stock, which is already roughly 15% ahead of market value.

Our complete analysis for SAP’s stock is here.

Notes:

1)Estimated based on data from Gartner Research

Trefis members constitute more than tens of thousands of users of the Trefis platform, inclusive of investors, financial analysts, and business professionals who use the Trefis platform to create their own models and price estimates.

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The 10 Most Important Tax Tips Of 2010

Dec. 29 2010 - 4:31 pm | 1,057 views | 0 recommendations |

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It’s the end of the year, and while holiday baking may be top of mind, that niggling little task of getting the year-end tax tasks done is still there, bothering you over the scent of the fruitcake in the oven. The following?tips will give you some specifics so you can take care of taxes, and then get back to your fun holiday activities.

IN PICTURES: Top 10 Solutions For A Big Tax Bill

1. Defer Income Until 2011
   With lower payroll taxes starting in January 2011, if you have income you can defer and report in the new year’s taxes, do so. Hold your last batch of invoices and send them out in early 2011; save that bit of money by paying the 2011 tax rate.
2. Contribute To?A Retirement Plan
   Whether you choose to convert your traditional IRA to a Roth IRA or not, make sure you contribute the maximum amount you can before the year’s over. It’s one of the easiest ways to save money on your taxes.
3. Use Your Flexible Spending Account
   If you have a?flexible spending account (also known as a?health savings account or medical/health care spending account), use up what’s left in your account for 2010. And if you haven’t opened one yet, check into what your company offers. Be sure to specify the amount of your 2011 wages that you want to have placed in your flexible spending account. (Learn more in Benefits Of A Dependent Care Flexible Spending Account.)
4. Invest In Your Business
   If you need to make investments in your business – new equipment, upgraded machinery or real estate improvements – then invest before the year’s end for the?write-off on your 2010 taxes.
5. Save Energy
   Energy-efficient improvements in your residence before year’s end can get you a tax credit of up to $1,500. Though installing a new metal or asphalt roof may be out of the question between now and January 1, you can purchase energy-efficient windows, doors and appliances. And if you’re just itching for another home improvement project to tackle over the holidays, install a solar water heater or solar panels for another credit of up to 30% of the cost.

IN PICTURES: 6 Tax Credits That Anyone Can Claim

1. Itemize, Itemize, Itemize
   Keep track of your business expenses and put them into your itemized deductions; don’t forget home office purchases, supplies, fees for memberships in professional organizations, technological costs (web hosting, website design, internet costs). Be sure all your itemized costs are for the business and you have the receipts.
2. Donate
   Make charitable donations before the year’s end for the write-off, but don’t make the mistake of sending out checks dated on or before December 31 and thinking they will qualify. The?IRS specifies that checks mailed out must be postmarked by the last day of the year. You can also make donations through major credit cards, as long as the charges are authorized by the end of the year. (Generosity may be its own reward, but some charitable giving also provides personal tax benefits. Learn more in?Deducting Your Donations.)
3. Contribute To A College Savings Plan
   Save for your kids and save on your taxes -?up to $13,000 in 2010 for a college savings plan. The magic $13,000 limit keeps you under the federal gift tax.
4. Pay Your Next Health Insurance Premium
   If you’re self-employed, you can deduct 100% of the cost of health insurance premiums (up to the total of the?net earnings of your business). That can be a rather hefty deduction, since it includes costs for your spouse and dependents as well. You can pay ahead – cover your first premium of the new year in 2010, and you can claim it on your 2010 taxes. (Find out where you can take a tax deduction on the contributions you make; see Traditional IRA Deductibility Limits For 2010.)
5. Pay?Into A?Specialized Account
   Some employers offer the opportunity to contribute into specialized accounts, including dependent and commuter accounts. A dependent account covers the cost of child care, and a commuter account covers the cost of commuting expenses. Both have limits, but both can help you save on your taxes while paying for stuff you have to pay for anyway.

The Bottom Line
With taxes, you don’t know until you ask. You may be able to save much more than you think you can just by making a few simple changes, or by paying for expenses in December instead of January, February or March. It’s a little bit of forethought that can make the tax bill much more bearable.

For?the latest?financial news, see?Water Cooler Finance: FBI Insider-Trading Bust.

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MQM submits formal application to quit coalition

Thining ranks: Party position in the National Assembly.

KARACHI:?

The Muttahida Qaumi Movement (MQM) on Monday formally quit the coalition by submitting an application in the National Assembly to sit on the opposition benches. Senator Tahir Mashadi of the MQM also submitted an application to the?Senate Chairman for the allotment of opposition benches .

Talking to Express News, MQM leader Babar Ghauri?asserted that MQM?does not?have the intentions to remove Prime Minister Yousaf Raza Gilani nor does it want to resort to political blackmailing.

Updated from print edition (below)

MQM drops bombshell: PPP loses ally, majority

In the final act of its long impending divorce from the coalition government, the Muttahida Qaumi Movement (MQM) on Sunday announced its defection to the opposition benches in the Senate and? the National Assembly — a decision that has stripped the Pakistan Peoples Party (PPP) of its already slender majority in parliament.

As the junior partner in the coalition, the MQM officials quit the alliance with the Pakistan Peoples Party on December 27 but left the door ajar for rapprochement if its grievances were properly addressed.

Exactly a week later MQM lawmaker Haider Abbas Rizvi told the media after a three-hour long Rabita Committee session that the decision to sit in the opposition had become inevitable for the party after the government increased petroleum prices — a move that it said would directly hurt the common people from whom the MQM draws its vote bank. State Youth Minister Faisal Sabzwari said the poor law and order situation in the province, especially Sindh, was also one of the main factors behind the announcement.

Another lawmaker of the ?party, Waseem Akhtar, told?The Express Tribune that he saw no irony in the fact that the MQM would now be sitting alongside the Pakistan Muslim League-Nawaz (PML-N) with whose leaders he had only recently had a slanging match. “Such things happen in a democracy and there’s nothing out of the ordinary in that,” he said. The party will file a formal request to sit on the opposition benches before the speaker at Monday’s National Assembly session. Akhtar said that his party had taken a principled stand against inflation in the country. “This has nothing to do with the ongoing talks (with the PPP) or with President Asif Zardari.”

Despite pulling out of the government, Rizvi said the MQM is neither destabilising the government nor derailing democracy.

Asked where his party would stand in case of? a vote of no-confidence against Prime Minister Yousaf Raza Gilani, Akhtar said, “When the time comes, the party will decide after consulting with the Rabita Committee.” However, Rabita Committee member Wasay Jalil could not resist dropping a hint. “Doesn’t sitting on the opposition benches give an indication where things are heading?” asked Jalil.

Also, MQM chief Altaf Hussain telephoned PML-Q chairperson Chaudhry Shujaat, PML-F chief Pir Pagara, JUI-F chief Fazlur Rehman and Ejazul Haq, and took them into confidence about his party’s decision.

PPP leaders continued to put on a brave face, with its leaders insisting there was nothing to worry about. Even though the party’s chief troubleshooter Rehman Malik was in town, he was nowhere to be seen. No emergency session was held either at Bilawal House where the president was staying or at the Chief Minister House.

Fauzia Wahab, the party’s information secretary, said the president was deliberately quiet because he was genuinely interested in reconciling with the MQM. When asked whether the PPP had lost its majority in parliament and would be forced to call mid-term elections, she dismissed the assertions as immature at this point. “Have the MQM and PML-N become friends? Are the PML-N and PML-Q on good terms?” she shot back. She insisted that her party didn’t need to show its strength in parliament. “Why should we prove that we have a majority in parliament? They should come and prove on the floor of the house that we don’t have a majority,” she said.

Presidential spokesperson Farhatullah Babar said the president was watching the developments very closely. “We sincerely hope that the MQM will reconsider its decision as the president believes that all differences can be sorted out,” he said. However, sources say that there are a few hurdles blocking a PPP- MQM rapprochement, including the fate of Home Minister Zulfiqar Mirza.

PPP leaders do not view its shrunken numerical strength in parliament as a problem. They claim that the PML-Q like-minded group is ready to join them on the treasury benches. However, MQM’s departure would mean that it would become harder to keep a handle on Karachi’s law and order breakdown. Meanwhile, Nine Zero issued a statement late in the night: “MQM founder and leader Altaf Hussain has ratified the decision of the coordination committee. The meeting condemned the stupendous increase in petrol, diesel, and kerosene oil prices and noted with concern that the poor and middle-class people were already faced with misery and hardship.

About the decision, it said pressure was mounting on the elected representatives because of the increase in POL prices. “In these situations MQM considers it a travesty to sit on the treasury benches hence we would sit on the opposition benches in the Senate and National Assembly. Nonetheless we will continue to support positive steps of the government and openly oppose all those steps that go against the interest of the people.”

Published in The Express Tribune, January 3rd, 2011.

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