NOKIA’S NEW STRATEGY

Nicholas Vardy

Nicholas Vardy has a unique background that has proven his knack for making money in different markets around the world.

Although Nokia stumbled briefly in 2004, its market share of the cell phone market has recently shot back up over 35%. This year, Nokia will sell 320 million phones. That’s more than one phone for every single person in the United States.

Nokia has outperformed the S&P by well over 20% in the last six months, and recently displaced GE as mutual fund giant Fidelity Magellan’s number #1 pick:

Here’s why I think Nokia’s current position offers the perfect opportunity for Global Bull Market Alert subscribers to enter this high-growth, high-octane global blue chip stock:

With new CEO Olli-Pekka Kallasvuo taking Nokia’s helm this week, Nokia is in the midst of redefining itself. It’s best to think of Nokia as part Apple (AAPL), part Dell (DELL). Ten years ago, Nokia’s biggest competitor was Motorola. Today, Kallasvuo views consumer electronics companies such as Apple and Sony as the Finnish giant’s biggest rivals. Nokia’s new N series, with each phone focusing on a specific feature — iPod style player, a camera phone, a Blackberry style e-mail device — is Nokia’s answer to Apple’s strategy of high-end, high-margin products. Thanks to this convergence, Nokia has become the world’s #1 manufacturer of cameras virtually overnight. The numbers bear out the success of this strategy: Nokia is the only cell phone manufacturer that has increased the average price of its handsets sold in the last quarter, thanks to more expensive multimedia phones.

But with its efficient logistics and huge volumes, today Nokia is more like Dell than Apple. Indeed, 70% of the cell phone industry’s growth is coming from developing economies. Nokia’s cheapest handsets already dominate BRIC countries like China, India and Brazil. Nearly 35% of Nokia’s total handset sales came from emerging markets.

Exclusive  GLOBAL STOCK INVESTOR HOTLINE UPDATE 57

By combining high-margin iPod style products like the N-series with a huge market share in entry-level phones of which it sells hundreds of millions a year, Nokia is locking in consumers across the entire value chain. The logic is simple but compelling. Once you start with a Nokia, you are more likely to stick with it. Compare Motorola’s one hit wonder strategy with the V3 versus Nokia’s integrated marketing strategy and it’s hard to remain unconvinced of its prospects.

Finally, as a Finnish company that collects revenue from over 100 nations in the world, Nokia is an ideal hedge against the declining dollar. The stock itself is Euro-denominated. So every time the dollar goes down, smile, because your Nokia shares just went up. And investing in Nokia’s far flung cell phone empire replicates Warren Buffett’s new strategy of hedging against the dollar’s decline by buying into companies with mostly non-dollar revenues.

Nokia’s biggest weakness? North America. In the U.S., Motorola still dominates with a 29% market share, compared with Nokia’s 18%. Not to worry. Kallasvuo has pledged to spend one week a month in the U.S. to have his hand on the pulse of trendsetting markets that gave products like the Apple iPod its iconic status.

So buy Nokia (NOK) at market today, and place your stop at $18.75. To play the options, buy the October 22.50 calls (NAYJX.X). A word of warning: Nokia is highly news-driven and can be notoriously volatile for a large-cap stock.

Like This Article?
Now Get Our FREE Special Report:
Alternative Investing: Investing in Timber

Stock Investor editor Paul Dykewicz reveals why investing in timber may be one of the best long-term portfolio strategies you'll find today.

Get Access to the Report, 100% FREE


img
previous article

Even the darkest cloud has a silver lining, and last week's sharp stock market correction is no exception.

PREMIUM SERVICES FOR INVESTORS

Dr. Mark Skousen

Named one of the "Top 20 Living Economists," Dr. Skousen is a professional economist, investment expert, university professor, and author of more than 25 books.

Product Details

LEARN MORE HERE

Bryan Perry

A former Wall Street financial advisor with three decades' experience, Bryan Perry focuses his efforts on high-yield income investing and quick-hitting options plays.

Product Details

LEARN MORE HERE

Jim Woods

Jim Woods has over 20 years of experience in the markets from working as a stockbroker,
financial journalist, and money manager. As well as a book author and regular contributor to
numerous investment websites, Jim is the editor of:

Product Details

LEARN MORE HERE

Bob Carlson

Bob Carlson provides independent, objective research covering all the financial issues of retirement and retirement planning. In addition, Bob serves as Chairman of the Board of Trustees of the Fairfax County (VA) Employees’ Retirement System, which has over $2.8 billion in assets.

Product Details

LEARN MORE HERE

Mike Turner

Mike Turner’s financial, mathematical, computer science and engineering background serves as the foundation for his disciplined, rules-based approach to trading. Mike’s three services include:

Product Details

LEARN MORE HERE

Hilary Kramer

Hilary Kramer is an investment analyst and portfolio manager with 30 years of experience on Wall Street. Since 2010, Hilary's financial publications have provided stock analysis and investment advice to her subscribers:

Product Details

LEARN MORE HERE

DividendInvestor.com

Used by financial advisors and individual investors all over the world, DividendInvestor.com is the premier provider and one-stop shop for dividend information and research.

Product Details

Popular tools include our proprietary Dividend Calendar, Dividend Calculator, Dividend Score Card, and many more.

LEARN MORE HERE