Several years ago, I purchased the Nokia Communicator. It connected me to
the Net; allowed me to check for e-mail; I could set appointments. It was
amazing. Unfortunately, I did not use it much. Basically, it was too big to
But what impressed me was that, for a big company,
Yesterday, Nokia reported its earnings and they were decidedly strong,
surging through analysts’ expectations. In the past quarter, the company
had net profits of $827 million, which was up from $567.2 million the same
period a year ago. In fact, Nokia’s CEO, Jorma Ollila, believes that his
company will show 30 to 40 percent sales increases for 2000.
But, just as
has been the case for some time, Nokia will likely beat these numbers.
Moreover, the company announced a 4 for 1 split, as well as a 2 million
I think the key to the strength is the company’s constant innovation. Last
year, Nokia introduced 18 new phones.
Another example is an acquisition yesterday of Network Alchemy. The company
develops technology to secure Net communications, commerce and
However, there are some danger signs. The company has been lagging in the
CDMA cell standard, which is the fastest growing market in the US. But
there is time for the company to catch-up.
Of course, the market for wireless is soaring. There are expected to be
over 1 billion cell users by the end of 2002. There are currently about 480
million users now.
Nokia is the #1 maker of cell phones – sporting 30 percent of the cell
global cell market (compared to 23 percent in 1998). The closest competitor
is Motorola, with 20 percent.
Actually, with the new wave of mega mergers, it is possible that Nokia may
even be a target. Interestingly enough, there is talk that News Corp. will
merge with the company.
Regardless of this, the fact is that Nokia is the dominant player in the
wireless world. It’s a blue-chip that should continue to provide investors
a nice way to play the wireless trend.