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Did you miss Tim Beyers and I arguing over Research In Motion (Nasdaq: RIMM  ) and Nokia (NYSE: NOK  ) last week? He favors the Finnish Nokia. I would rather finish with the BlackBerry maker.

Once again, Tim does a pretty good job of making the bearish case for his own candidate. He concedes that Nokia has its warts: It recently announced layoffs, slashed its dividend for the second time this decade, and is coming off a horrendous quarter. Research In Motion, on the other hand, is coasting along as it gobbles up market share, cynics, and analyst targets.

Isn't that where you want to be as an investor?

That's a sweet 'Berry
One of the reader comments over the weekend poked fun at BlackBerry regarding a carrier promotion last winter. Verizon Wireless -- a joint venture of Verizon Communications (NYSE: VZ  ) and Vodafone (NYSE: VOD  ) -- began offering a "buy one, get one free" deal on select BlackBerry devices in early February. The reader ribbed RIM's signature product as the "BOGOBerry!" (Buy One Get One...berry.) But assuming that this move revealed desperation on RIM's part seems to overlook how carriers work.

Wireless companies sell heavily subsidized phones, knowing that they will make up the losses on two-year contracts. Most wireless companies have no problem offering free Nokia handsets, as long as you commit to two years of service. After maximizing potential discounts, Sprint Nextel (NYSE: S  ) will even pay you to take a Samsung Instinct off its hands.

But Samsung and Nokia still get paid for those sales, the same way Apple (Nasdaq: AAPL  ) gets hundreds more than the $199 you're forking over to AT&T (NYSE: T  ) for that iPhone. Even in the cases where the handset makers and carriers cave in a little to drive prices lower, the smartphone companies know exactly what they're doing.

RIM's numbers say it all. Verizon Wireless was moving BOGOBerrys for most of February during RIM's first quarter. In that time, RIM grew its bottom line by 25%, widened its market-share lead in domestic smartphones, and closed out the period with 25 million BlackBerry-texting jockeys.

This doesn't mean that Tim is wrong about owning Nokia. He's right about its enviable free cash flow generation and the company's pole position in emerging markets. However, I feel he'll do even better if he hops on the RIM bandwagon. The growth is already there -- and the stock gains will follow.

Other smart smartphone connections:

Apple is a Motley Fool Stock Advisor pick. Nokia and Sprint Nextel are Motley Fool Inside Value recommendations. Try any of our Foolish newsletter services free for 30 days.

Longtime Fool contributor Rick Munarriz has never gone to a U-pick berry farm, though he's always wanted to pull over when he sees one in season. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. He does not own shares in any of the companies in this story. The Fool has a disclosure policy.

Read/Post Comments (2) | Recommend This Article (2)

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On June 01, 2009, at 3:29 PM, henrystar wrote:

    "Did you miss Tim Beyers and I arguing over Research In Motion (Nasdaq: RIMM) and Nokia (NYSE: NOK) last week?" Well! Would you have said, "Did you miss I commenting on..." ? No! You would have said "Did you miss me commenting on..." So, you should have said, "Did you miss Tim Beyers and me arguing over Research In Motion (Nasdaq: RIMM) and Nokia (NYSE: NOK) last week?

  • Report this Comment On June 01, 2009, at 11:53 PM, nerdfrombd wrote:

    I like what RIM's been doing lately, but I agree with Tim Beyers that Nokia's the way to go. I am seeing Nokia's dominance in emerging markets first hand as I live in Bangladesh, and Nokia's market dominance is amazing. Right now, with nearly 30 million cellphone owners, Nokia has a 60% market share. And there's a lot of room to expand with 60 million potential customers in just this country. It's a lot easier to expand than compete in saturated markets and that's what Nokia's doing.

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