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Technology Stocks : Nokia (NOK) -- Ignore unavailable to you. Want to Upgrade?

To: Diamond Jim who wrote (7772)	10/19/2000 10:05:21 PM
From: Puck	Read Replies (2) \| Respond to of 34857

Jorma O'llila and the Analyst Community: A Fable A Cautionary Tale Nokia CEO Jorma O'llila did have good reason to provide guidance that the disrupted 3Q product introductions would impair profitability growth for that quarter in addition to the expected cost of Nokia's newly aggressive campaign to gain market share. Because of the strong growth trend in wireless subs worldwide, even though 3Q is the weakest in the industry, market participants would have been looking for quarterly sequential revenue growth nonetheless. Jorma recognized that their delayed product introductions might harm Nokia's near term profit growth and told everyone of his concern that this might happen. To his credit, he gave everyone fair warning and was frank and honest about the situation instead of just emphasizing the positives and glossing over or not mentioning the negatives and then praying as an American CEO would most likely do. In doing so, he presented a revised range for 3Q's earnings guidance--the revenue would continue to grow and that earnings would be below 2Q 99's (.20 euro) and at least equal to 3Q 00's level (.13 euro). This was a wide margin and he was being realistic in making it so because of the many tricky variables at work whose outcomes were unpredictable. 3Q 00 (.19 euros) earnings did indeed come in within that range, albeit at the high end. As chance would have it, the unknowable variables--smoothness of the product introductions, market acceptance, etc.--wound up being rather benign. What can we learn from this experience? That Jorma O'llila is unusually open and honest with his shareholders in discussing his outlook for Nokia's business including potential--and I emphasize the term "potential"--future problems so that all can be well informed and educated in advance. Maybe it wasn't incumbent upon him to mention his concerns for next Q's earnings but in fairness to all he did in a very timely fashion and he provided as much detail in that guidance as he realistically could. Furthermore, he never wavered from that guidance once given. The shame is that the analyst community and some of Nokia's impatient institutional shareholders didn't take him at his word but instead arrived at their own unfounded, illogical conclusions about the severity of the problems, their root causes, and their implications for Nokia's future. Some analysts wound up believing what they wanted to believe instead of listening to Jorma as dutiful students and respecting his words. This will be a lesson hard earned for some, no doubt, but a very useful one I am sure. In the future, for those unaware heretofore, Jorma O'llila will be esteemed as highly as a CEO can be for being candid, honest, and a mean who means what he says and says what he means with respect for all and malice toward none, nothing more and nothing less. God Save Jorma! All Hail!