Recap of Sat., August 30:Nokia and NTT DoCoMo

Our panelists give you the scoop on all the inside business information before you hear it anywhere else in The Informer segment:

Bob Sellers: Lea, you have a cover story on diamonds (search) this week. How can folks watching us right now profit from what you’ve found out?

Lea Goldman, reporter: Well, everybody’s heard about diamonds, but what about the company that supplies Tiffany’s (TIF) with their diamonds. This is a Canadian company called Aber Diamond (ABER). It trades on the Toronto Exchange and NASDAQ. I like this company because the diamonds that come out of its mines are big, chunky, 2 class karat diamonds. This is the really profitable stuff. The mines are based in Canada, so you avoid the political instabilities you often get with the African producing countries, and it has this great 10-year supply deal with Tiffany’s. What could be bad?

Victoria Murphy, senior reporter: As the cover story shows, De Beer’s monopoly on this market is cracking, and I think that’s great, it’s good for the market, but it also means that prices could fall. Generally, when a monopoly falls, so do prices, and I think that could be bad news for the suppliers.

Lea Goldman: I have to disagree. There aren’t that many diamond producers coming out of Canada. Everyone has an interest in keeping diamond prices up. De Beers’ losing market share is significant, but there are other companies that are kind of picking up the slack and keeping the price up.

Bob Sellers: Okay, Bruce, what do you have today?

Bruce Upbin, senior editor: Laser eye surgery. Those of us who have had VISX (EYE) and about 600,000 people get it every year have problems. As people know, you get glares and halos and night problems. There’s a new surgery called Wave Front that uses a very neat telescope trick to focus the lasers. There are two companies that do this: Alcon (ACL) and VISX.

Lea Goldman: I don’t know. I’m hearing some iffy things on the market. First of all, some big investors recently sold out of VISX, and it just got downgraded because of some associations with a dubious company. I don’t know if I’d be so quick to buy.

Bruce Upbin: Well, Alcon is sixteen times the size of VISX. VISX is a little more iffy, so if you were going to pick one, go with Alcon.

Bob Sellers: OK, Victoria, what do you have today?

Victoria Murphy: I’m going to talk about tech. If you like tech right now, but you’re feeling a little ‘once bitten/twice shy’, and I would certainly put myself in this camp, there’s a way that you can hedge your bets. Look at growth mutual funds that have significant holdings in tech. This way, if tech continues to rise, you get the upside, but if it doesn’t, you might get returns from other industries that these mutual funds have interests in. FMI Focus Fund (FMIOX) and Meridian Value Fund (MVALX) are the two that I like. They are mentioned in the current Forbes Mutual Fund Issue. FMI is a little more bullish on tech, 30 percent of their holdings are tech, whereas Meridian is more conservative at 16 percent. Both of these have no sales charges and relatively low expense ratios.

Bruce Upbin: I just have one piece of advice for anyone who would buy these two. They do generate large, taxable gains from time to time. So if you’re going to buy them, put them into a tax-sheltered account, like an IRA or a 401k.

Bob Sellers: And Lea, is this a case where people are trying to get the old days, the good old days, back in the 90’s when they’re even still looking for tech? I mean, we had a move this year, but is it too late?

Lea Goldman: No, I don’t think it’s too late. I mean, definitely this is the conservative route to go. I mean, it’s kind of like dipping your toe in the shallow end of the pool.

Makers & Breakers

Nokia (NOK)

Ben Boissevain, managing partner of Agile Equity: MAKER

I like Nokia, it is definitely poised for growth for several reasons. One is that there’s a lot of new applications coming out on the cell phone, including music, video, sending pictures, delivering e-mail. A lot of those new applications are being developed by right Nokia now, they’re actually working. Number two is that they’re actually moving into other markets like China, India and Russia.

Jim Michaels, editorial vice president: BREAKER

The plucky little Fins. I admire what they’ve done in this business, but unfortunately for them, they’re in technology hardware. The whole history of technology hardware is that it eventually becomes a commodity and the folks from the far east take over.

Bill Baldwin, senior editor: BREAKER

Jim is totally right about this. I was in a shop the other day which boasted that it sold 400 different brands of hot pepper sauces. This is a ‘hot pepper sauce’ market. None of those sauce companies are making any money.

Ben Boissevain: The reality is that they’ve got the research and development budget to keep the new applications on the leading edge.


Ben Boissevain: MAKER

NTT DoCoMo is a Japanese mobile carrier, which is one of the best in the world. I like it because they are really poised for growth with China right next door as a market.

Bill Baldwin: MAKER

This thing does make sense to be because, I think, this market is going to eventually coalesce into a very consolidated, oligopolistic market, and oligopoly, with just a few players, is the next best thing to a monopoly.

Jim Michaels: BREAKER

Good company, too expensive. $130 billion market cap scares the hell out of me.