Thursday, May 24, 2012

Post Picayune lowers Nokia target price to $0.00

A lot of people wonder: When will Microsoft buy up the remains of Nokia, now that they ****** their *** up like in a car crash? How low does the stock have to go before MS buys the cadaver?

Here is my prediction: $0.00.

Why? Because as long as MS has a man on the inside (Stephen Elop... inside and all the way up), they already own Nokia as much as they need to.

People expect MS to bail out Nokia and prevent it from failing. When would they do that? Answer: When the stock price reaches $0.00. At that price, it means that investors do not expect to have any ROI at all from a purchase of Nokia. It is essentially the value of a bankrupt company. If the stock price is above that, it means that Nokia's probably not bankrupt and still has its own assets to waste on its survival. So why would MS throw its own money onto the fire when Nokia is still burning away quite toastily?

What factors determine NOK's current price, which has a market cap lower than its book value (ie. it is undervalued)?
1. Expectation that Nokia will burn through its cash and may go bankrupt in a year or three, and that it is completely committed to this doomed fate, pushes the price toward $0.
2. The possibility that it will become profitable in the next few quarters keeps it away from $0, but its current trajectory suggests that this is not likely without some miracle.
3. The possibility that Elop will be fired, and the stock will jump, and that the company can be turned around or even that the company will be liquidated before it goes bankrupt, makes for a long-shot bet that the stock will be worth a lot more than it is now.

In my estimate, many investors have hope that Nokia will stop doing what it's doing and what it has publicly committed to keep doing, and fewer have hope that they'll stick to their plan and succeed, while most investors expect them to stick to the plan and fail.

If MS doesn't already control Nokia's shareholders, then there is a chance that Nokia will come to its senses and fire Elop. In that case, we're talking about a different game. First, there will be a jump in the stock price simply from the renewed hope that Nokia may turn itself around without Elop. But there will also be a jump if there is a perception that MS no longer owns the company. If people believe that MS still wants to control Nokia, then at that point they may need to pay more than $0.00 for it, and the price will go up depending on how much they are seen to need it.

If the current trend continues---Nokia failing in its Windows Phone strategy and yet remaining committed to its own doom---I think that it indicates a general understanding that Nokia is completely controlled by MS, and that MS has no interest in seeing Nokia succeed. If MS only needs Nokia to stay afloat, it can do so at a value as low as $0. A bailout at any higher means that MS is--or wants people to see that they are--committed to Nokia's success, not just their existence. MS just doesn't roll that way. If anything, they might want such a bailout to be done secretly, so that it's not seen as the embarrassment of "WP manufacturers have to be propped up." If these speculations are indeed true, then Nokia stock price and book value should head for $0 in absence of some great success for WP and/or a shareholder revolt.

Disclosure: I have no position in either of the stocks mentioned, and I would rather see MSFT dead and buried in a pile of its own pig feces than consider investing in them, and it would be nice if NOK got the hell away from MS and climbed out of the grave Elop's been relentlessly digging for them.

I was looking for a job, and then I found a job. And heaven knows I'm miserable now

In the movie American Splendor, Harvey wakes up from a nightmare to his comforting reality: "I got a job! I got a job!"

For me "I got a job" is the nightmare from which to wake.

Most people seem to treat a job as a necessity. They wish me luck in finding gainful employment. They treat it as if I'm missing out on something.

I do not see it that way.

Work is not a necessity. Work is usually only a means to fulfil other (real) necessities. Satisfying work may also be a luxury.

Further I submit that no woman or man is truly free who needs to do work for someone else in order to eat. I realize I'm speaking of an ideal world and not the reality we currently exist in, but I do believe that almost no one is truly free in our world (for this and any multitude of other reasons).

If you are forced to do the work that another commands, just so you are able to survive, then you are a slave. Even if work is inescapable in life, a free person would at least do work according to her own will, not the will of others.

I think most would vehemently disagree, because most feel they need their jobs (and they pretty much do, because they're enslaved by employers and a society built to avoid making it easy to not work), and the thought that "this is how reality is" is easier to accept than the thought that "there are many other options, but they're kept from me." It is more comforting to believe that we are in control of a reality with many inherent limits, than it is to accept being controlled and limited by others.

Until things change (and they will, whether in a hundred, or a thousand, or a million years), it seems the only way to escape the "work is a necessity" mentality is not just a change in attitude, but some combination of a change in lifestyle, luck, ... and hard work.