Q: Nokia Corp. stock has been plummeting. Do you see any future in this stock, or should I get out and take my losses?
A: The world's largest maker of mobile devices has struggled in the new world of smartphones against Google's Android and Apple's iOS operating systems.
Faith in the future of this Finnish company depends on whether you believe a new partnership can help it expand profitably beyond the low-priced phone market.
It has signed a partnership with Microsoft Corp. to use Windows Phone software as its primary smartphone operating system rather than its own Symbian software. Customer reaction to its Windows smartphones will be watched closely.
Nokia stock recently was down about 40 percent this year. Speculation about market share slipping further or the company being sold has shareholders worried.
Here's a positive: In a settlement ending a long-running patent dispute, Apple agreed to pay Nokia a one-time amount, estimated to be in the hundreds of millions of dollars.
Despite its challenges, Nokia retains a strong balance sheet and sizeable cash flow and research abilities.
As it restructures, consensus analyst rating of Nokia stock is "hold," according to Thomson Reuters, consisting of two "strong buys," six "buys," seven "underperforms" and one "sell."
Credit rating agencies have lowered their Nokia ratings. When Fitch Ratings downgraded Nokia to the lowest investment grade, with a negative outlook, it explained: "The pace of deterioration has picked up since Nokia decided to switch to an alternative operating system."
Nokia's global mobile phone market share fell to 25 percent in the first quarter, down from 31 percent a year earlier, according to Gartner Inc. Cheaper Asian rivals cut into its low-priced phone business, and its smartphone share fell.
Despite the Microsoft deal, Nokia said it will offer later this year a touch-screen smartphone based on the MeeGo platform developed with Intel Corp.
Q: I would like your opinion of Columbia Seligman Communications & Information fund, which I have some interest in.
A: Paul Wick really knows the volatile field of technology.
Lead manager since 1990, Wick pays more attention to stock prices than some tech competitors and avoids companies that aren't generating cash.
The $4.1 billion Columbia Seligman Communications & Information Fund "A" (SLMCX) recently was up 34 percent over the past 12 months to rank in the lowest one-third of technology funds. Its three-year return of 9 percent placed it in the upper half of its category, and its 10-year annualized returns of 5 percent placed it in the upper quarter.
"This fund is a specialty holding suitable for investors seeking focused tech exposure, but not for a huge portion of a personal portfolio," said Courtney Goethals Dobrow, mutual fund analyst with Morningstar Inc.
The fund lagged in the smartphone and tablet markets while being overly tied to personal computers, she noted. However, it has better downside protection than its peers and, as a result, hasn't had as big a hole to dig out of as rallies began.
Wick has support of co-manager Rich Parower and a team of tech analysts divided between Silicon Valley and New York City. They make significant bets on semiconductors when the cycle is advantageous and are permitted to invest significantly in the health care sector.
Technology makes up about 94 percent of the portfolio. Top stocks recently included Synopsys, Symantec Corp., Apple Inc., Amdocs Ltd., ASML Holding NV, KLA-Tencor Corp., NetApp Inc., Qualcomm Inc., Oracle Corp. and Hewlett-Packard Co. This 5.75 percent "load" (sales charge) fund requires a $2,000 minimum initial investment and a 1.36 percent annual expense ratio.
Andrew Leckey answers questions only through the column. Write to him at yourmoney@tribune.com
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