2. Abstract.
In this project, we are calculating the Capital Gains Yield, the Dividends Yield, and
the Total Yield for Nokia and Motorola to illustrate how these two companies are
preforming financially. Those calculations are made from the Stock Prices and the
Dividends, which were allocated form the Bloomberg Terminal.
Introduction.
Before we talk about our findings and our research, let us get to know about what
these companies are how they are performing in the market.
Nokia.
Headquarters in Finland.
The company was founded in 1871 by Fredrik Idestam and Leo Mechelin.
Nokia first entered the telecommunications equipment market in 1960 when an
electronics department was established at Finnish Cable Works to concentrate on
the production of radio-transmission equipment.
One of the world's cutting-edge technology companies and until 2012 the world's
largest maker of cellphones—failed to adjust quickly enough to changes in how
people used their phones.
Nokia is traded is NOK in New York Stock Exchange. (NYSE)
Currently owned by Microsoft.
Motorola.
Founded on September 25, 1928.
Headquarters- Schaumburg, Illinois, United States.
Motorola's wireless telephone handset division was a pioneer in cellular
telephones. Also known as the Personal Communication Sector (PCS) prior to
2004, it pioneered the "flip phone" with the MicroTAC.
Motorola's handset division recorded a loss of $1.2 billion in the fourth quarter of
2007, while the company as a whole earned $100 million during that quarter.
3. Its global market share has been on the decline; from 18.4% of the market in 2007
the company had a share of just 6.0% by Q1 2009.
Motorola is traded is MSI in New York Stock Exchange. (NYSE)
Currently owned by Google.
INDUSTRY OVERVIEW
While the telecommunications industry is more than a century old, the industry today
finds itself in the middle of a communications revolution as broadband and wireless
technologies radically transforming the industry. According to the recent study done by
the government agency, In the United States:
The number of American wireless customers now exceeds 290 million, a penetration rate
of approximately 95 percent. According to a recent government study, 27 percent of U.S.
homes rely on cell phones only for voice services.
With the wireless voice market at near saturation, the new major growth area for service
providers is data as more and more customers upgrade to smartphones with data service
plans. In addition, a new market is emerging for machine-to-machine wireless data
communications.
In recent quarters, smartphones have made up for at least 40 percent of all new handset
sales. Approximately 31 percent of all wireless customers now have smartphones, and that
number is projected to grow to 67 percent by 2015.
According to the Federal Communications Commission (FCC), high-speed wire line
Internet connections have flattened. Growth in the first half of 2010 was 1 percent,
totaling 82 million connections. Meanwhile, mobile broadband connections in the same
period grew by more than 27 percent to more than 71 million connections.
4. Two-thirds of all Americans now have wire line-based broadband service at home,
according to the Pew Internet Project's August 2010 survey. That figure is an increase
from 2009 when 63 percent of Americans had a home wire line broadband connection.
The Financial Information.
(P) Stock Price, “The cost of purchasing a security on an exchange.” (InvestorWords)
(D) Dividends, “A dividend is a distribution of a portion of a company's earnings,
decided by the board of directors, to a class of its shareholders. Dividends can be issued
as cash payments, as shares of stock, or other property.” (Investopedia)
(CGY) Capital Gains Yield, “The price appreciation component of a security's (such
as a common stock) total return. For stock holdings, the capital gains yield will be the
change in price divided by the original (purchase) price.” (Investopedia)
(DY) Dividends Yield, “A financial ratio that indicates how much a company pays
out in dividends each year relative to its share price.” (Investopedia)
(TY) Total Yield, CGY + DY.
Motorola
2008 2009 2010 2011 2012 2013
P0 P1 P2 P3 P4 P5
$18.14 $31.78 $37.15 $46.29 $55.68 $67.50
D0 D1 D2 D3 D4 D5
$1.40 $0.35 $0 $0.22 $0.96 $1.14
DY1% DY2% DY3% DY4% DY5%
1.93 0.00 0.59 2.07 2.05
CGY1% CGY2% CGY3% CGY4% CGY5%
75.19 16.90 24.60 20.29 21.23
TY1% TY2% TY3% TY4% TY5%
77.12 16.90 25.20 22.36 23.28
Nokia
2008 2009 2010 2011 2012 2013
P0 P1 P2 P3 P4 P5
$15.67 $12.79 $10.27 $4.89 $3.87 $8.03
D0 D1 D2 D3 D4 D5
$0.59 $0.56 $0.53 $0.28 $0 $0
DY1% DY2% DY3% DY4% DY5%
3.57 4.14 2.73 0.00 0.00
CGY1% CGY2% CGY3% CGY4% CGY5%
-18.38 -19.70 -52.39 -20.86 107.49
5. It seems that Motorola have a better performance form the information regarding
its increasing stock prices which more than tripled during the years 2008 through 2013
which is possibly due to the purchase of Google to the company’s mobile division. This
resulted in a steady flow in the overall Capital Gain Yield Ratio expect for the year 2009
due to the high increase from $18.14 in 2008 to 31.78 in the year 2009. In the last three
years the company had an average CGY in the low twenties, which is a good indicator of
the good security of the company’s investment. Whereas, Nokia the very well-known
Finnish telecommunication company had a decreasing stock price over the years 2008
through the year 2012, but in the year 2013 the company had a considerable increase the
doubled its stock price, which could be very much due to the purchase of Microsoft to the
Mobile division of the company that benefited the company’s performance lately. In
regard to the Capital Gain Yield the company was not doing nearly good as Motorola
where it was resulting in negative percentages due to the decreasing stock prices but again
as mentioned the impact of Microsoft purchase have shown a significantly better result in
the CGY of the year 2013, that is resulting in a safe and secure investment.
In regards to the dividends, Motorola gives very low dividends compared to their
stock, but it is increasing from the last three years. The Dividends Yield reflects the
dividends policy of the company which are low but steady in the last two years, where it
would be a very unlikely to an investor interested in a high cash flow of his or her
investment, but likely for some who want a steady alternative. In the other side, Nokia’s
dividends are proportionally high with their stock prices, but it seems that they have
1.93 0.00 0.59 2.07 2.05
CGY1% CGY2% CGY3% CGY4% CGY5%
75.19 16.90 24.60 20.29 21.23
TY1% TY2% TY3% TY4% TY5%
77.12 16.90 25.20 22.36 23.28
Nokia
2008 2009 2010 2011 2012 2013
P0 P1 P2 P3 P4 P5
$15.67 $12.79 $10.27 $4.89 $3.87 $8.03
D0 D1 D2 D3 D4 D5
$0.59 $0.56 $0.53 $0.28 $0 $0
DY1% DY2% DY3% DY4% DY5%
3.57 4.14 2.73 0.00 0.00
CGY1% CGY2% CGY3% CGY4% CGY5%
-18.38 -19.70 -52.39 -20.86 107.49
TY1% TY2% TY3% TY4% TY5%
-14.81 -15.56 -49.66 -20.86 107.49
6. stopped giving it in the last two years, which resulted in a decreasing dividends amount
to zero in the last two years, which could be due to the new Management by Microsoft.
Their new dividends policy is reflected in their Dividends Yield ratio which shows that it
went up, down, and zero in the last two years. Unlike Motorola, this performance will be
very unlikely for those interested in a cash flow because it seems that there is none.
7. Citations
"Our story." Nokia. N.p., n.d. Web. 8 May 2014.
<http://company.nokia.com/en/about-us/our-company/our-story>.
"Company Profile." Investor Relations. N.p., n.d. Web. 8 May 2014.
<http://www.verizon.com/investor/industryoverview.htm>.
"Manufacturing." - Motorola Solutions USA. N.p., n.d. Web. 8 May 2014.
<http://www.motorolasolutions.com/US-
EN/Business+Solutions/Industry+Solutions/Manufacturing>.
"Nokia hangs on to second place in mobile-phone market - CNET." CNET. N.p.,
n.d. Web. 8 May 2014. <http://www.cnet.com/news/nokia-hangs-on-to-second-
place-in-mobile-phone-market/>.
The Bloomberg Terminal.
"Stock Price." What Is Stock Price? Definition and Meaning. Web. 14 Oct. 2015.
"Dividend Definition | Investopedia." Investopedia. 25 Nov. 2003. Web. 14 Oct.
2015.
"Capital Gains Yield Definition | Investopedia." Investopedia. 9 Nov. 2006. Web.
14 Oct. 2015.
"Capital Gains Yield Definition | Investopedia." Investopedia. 9 Nov. 2006. Web.
14 Oct. 2015.
"Capital Gains Yield Definition | Investopedia." Investopedia. 9 Nov. 2006. Web.
14 Oct. 2015.
