re: TheStreet.com on Nokia's CEO Roadshow
>> Nokia's CEO Tells Spurned Investors It's Safe to Love Again
Tish Williams
TheStreet.com
5/4/01 3:39 PM ET
Jorma Ollila, whisper sweet nothings in our ears.
You may have grown cold to the charms of wireless equipment. You see the management failures at Motorola (MOT:NYSE - news) and Ericsson (ERICY:Nasdaq ADR - news) and you think that dream you had on those hot, spring days was all a lie. So many unrealized charts of upward revenue growth. So much betrayal and pain. Wireless investor, you can love again. Just listen, if you will, to the sincere promises of Nokia's (NOK:NYSE ADR - news) CEO.
Ollila entranced investors during his annual spring road show speech in London on Friday with his clippy cadence and calming words. Nokia is the only company in the sector that knows how to be strong in the face of a slow U.S. economy. Nokia is the only competitor with a good head on its shoulders. It's the only company among the big three that could run a profit in the first quarter of 2001, grow market share and revenue.
You can still feel that same old passion.
Ten days after delivering stellar first-quarter results, Nokia's CEO didn't update his outlook. He doesn't have to. At this point, simply knowing where his business is going and proceeding without panic sets the Finnish handset leader apart. Despite Nokia's solid results, he still has to do some courting, allay some fears. He did so with the straightforward performance of his company.
As always, the deployment of next-generation 3G wireless technology is a tricky topic with investors. Ollila explained that even a year ago he thought any carrier goals of deployment in the spring or summer of 2001 were too ambitious. "Many analysts wrote that Nokia will be late," he said. Instead, Nokia intends to get middle-ground 2.5 generation handsets (GPRS) to customers by the second half of 2001, with a "significant, true commercial market" in 3G emerging in the second half of 2002. By next year, Ollila expects 2.5G offerings to make up 25% of Nokia's handset business.
Nokia already is gaining equipment market share as the market for European-favored standard GSM grows and takes business from North American wireless network standard TDMA. When it comes to handsets, Nokia strives for over 40% of the market share.
Ollila believes that Nokia will be the No.1 3G equipment provider, with a goal of 35% market share. But don't think Nokia is all sweetheart and no risk. Ollila stood firm on the issue of providing his 3G equipment customers "with a bit of financial support, which is necessary in the market today" -- meaning that vendor financing is a chance he's willing to take. Love it or leave it. Similarly, Ollila shrugged off Verizon's troubles with Nokia's CDMA handsets this week, adding that Nokia has worked with Qualcomm to resolve the issue, something he blamed on a loosely interpretable standard. "This is usual, nothing dramatic," he said.
The only business that gives Ollila pause is broadband equipment. Lehman Brothers analyst Tim Luke interpreted Ollila's more negative statements on broadband to mean "Nokia will accelerate disposal of this unit or otherwise acquire competitors if in six months time they can't get substantial improvement" in a research note. Luke considers Nokia a buy, and Lehman hasn't done banking for the company.
By next year Ollila expects the handset market to be re-energized and healthy. He thinks Nokia will be "getting a real kick out of our quality of stuff in the next two to three years." You'll be in love again, soon. Remember which equipment maker was always true to you. <<
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