Who's Laughing Now, Mr. Jobs?

While Steve Jobs overloaded his Reality Distortion Field to introduce the Apple (Nasdaq: AAPL  ) iPad tablet yesterday, there was far more substantial news brewing in Finland.

While you were sleeping this morning, Inside Value pick Nokia (NYSE: NOK  ) reported a fourth quarter strong enough to send after-hours traders into a feeding frenzy; Nokia's shares jumped 10% overnight, while Apple drifted ever-so-slowly downward.

Why do I keep dragging poor Apple into a discussion of Nokia? Because the Finns are eating Steve Jobs' macrobiotic lunch, deal Fool. Already the global market leader any way you slice it, Nokia increased its mobile device share from 37% last year to 39% today. In the all-important and high-margin smartphone segment, or what Nokia calls "converged device" sales, Nokia now holds 40% of the worldwide market, up from 35% a year ago. For all the hoopla you hear about Apple and Research In Motion (Nasdaq: RIMM  ) here in America, those guys are actually small fish in the ginormous seven seas.

Nokia still hasn't hit the big time in North America, perhaps because of a lack of well-designed distribution agreements with service providers like Verizon (NYSE: VZ  ) , Sprint Nextel (NYSE: S  ) , and AT&T (NYSE: T  ) . The company sold only 3.8 million phones here in the fourth quarter while shipping over 12 million units to Latin America and nearly 18 million to Greater China. Maybe that's why investors and analysts here tend to forget about this stock.

Total sales shrank 5.3% year over year to $16.8 billion, hurt by a poor showing from the telecom infrastructure venture with Siemens (NYSE: SI  ) . But margins are improving across the company’s larger, more important segments. Helped by a mobile devices division that’s on a roll, earnings fell by a minuscule $0.01 per depositary receipt to $0.36 per ADR.

The Finnish lion is roaring, but Steve Jobs gets all the attention. Once the Reality Distortion Field wears off, you'll see who the true leader in mobile computing is. Here's a hint: It doesn't wear a turtleneck sweater. Scoot over to CAPS and give Nokia some of the respect it deserves, will you?

Fool contributor Anders Bylund holds no position in any of the companies discussed here. Nokia and Sprint Nextel are Motley Fool Inside Value recommendations. Apple is a Motley Fool Stock Advisor choice. Try any of our Foolish newsletters today, free for 30 days. You can check out Anders' holdings and a concise bio if you like, and The Motley Fool is investors writing for investors.


Read/Post Comments (10) | Recommend This Article (36)

Comments from our Foolish Readers

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 January 28, 2010, at 6:26 PM, notnokia wrote:

    Wow. This article couldn't be more off the mark. Nokia is the global leader in small, simple mobile phones - not mobile computing. They have a few "smart phone" products with some interesting features, but they are tied to an obsolete operating system. They are far behind the bar set by iPhone OS, Android, and even WebOS. They have global dominance in simple phones that are given away for free by carriers, but not much beyond that. Their empire is in jeopardy, and they are trying desperately to play catch up. Evidence of their panic is the lawsuit and other games they are playing with Apple at the moment. As Apple increases their global marketshare, watch Nokia's desperation increase.

  • Report this Comment On January 28, 2010, at 9:02 PM, klattster wrote:

    Anders, you could not be more on the mark! NOK's earnings are just a short preview of what is coming this year and 2011. Services/software is a 1 billion dollar business end of 2011, smartphone strategy is beautiful, Symbian revamp end of 2010 for low end, Mameo for mid & high. Best part, they are building an open platform for developers. This ship is just starting to roll.

  • Report this Comment On January 29, 2010, at 3:13 AM, ChandraC wrote:

    You are living up to your site's name.

    Fail.

    Go see an optician.

  • Report this Comment On January 29, 2010, at 4:41 AM, GeneralDon wrote:

    bzzzzzzzzzzzzzzzzzzzzzt, WRONG! It was a noble effort though. I take it you own shares of Nokia.

  • Report this Comment On January 29, 2010, at 4:58 AM, mrMatti wrote:

    Article is quite stupid!!! "Who's Laughing Now, Mr. Jobs?" I must say as a Nokia owner and as Finn I realy liked what I saw last day. Nokia is truly heading for a right way now, and the key figures were realy strong. I realy hope that they could actualy make something for Americans, Iphone is a great example of a "simple" smartphone that is realy easy to use, and I like Iphone so much that I am actualy going to buy it soon. Only bad thing is that you cant call videocalls with Iphone. I´ll dont think that Blackberry has something special but Iphone has. But when the Morph nano phones are coming, I`ll bet that they r going to be the next number one thing

  • Report this Comment On January 29, 2010, at 6:06 AM, TMFZahrim wrote:

    > I take it you own shares of Nokia.

    Let's see:

    "Fool contributor Anders Bylund holds no position in any of the companies discussed here."

    Nope, sure don't. Next question?

    Anders

  • Report this Comment On January 29, 2010, at 1:43 PM, jgappleinvestor wrote:

    Nice attention grabbing headline but what you've failed to mention is that Nokia's profit on those 127 million phones sold was $1.2 billion whereas Apple's profit was as good as treble that on ~15 million devices sold (iPhones, Touches, Portables etc.). The so called Goliath's revenue only came out just above little insignificant Apple's revenue of $16 billion.

    Also I remember hearing back in July that iPhones and BBs accounted for just 3% of sales but 35% of profit. That must be much, much higher now.

    Buy AAPL, much bigger growth opportunities there.

  • Report this Comment On January 29, 2010, at 2:18 PM, Turfscape wrote:

    Hmmm...Nokia and Apple can both find success. And I hardly think that Nokia is cutting into Apple's bottom line. They are far more likely to edge out Motorola or other competitors who DIRECTLY compete.

    Apple's multiple revenue streams help to create the moat for the direct competition from Nokia or others. Not to say that cutting into iPhone sales wouldn't hurt...but that isn't really happening right now. I don't see it happening soon, either.

    Rather, I see this as an eye-opener regarding the true market potential that still awaits the iPhone.

  • Report this Comment On January 29, 2010, at 2:32 PM, kgveit2020 wrote:

    Nokia is in trouble, this will be evident in the coming quarters. They are way behind on the SmartPhone side. They are running out of time......

    Europe and China have kept them going on the low end but as people move to the Smarter phones they will be left looking around....... Who Dat ?

  • Report this Comment On February 02, 2010, at 12:15 PM, dolflundgren wrote:

    Nokia is far more formidable than blinded Apple zealots realize. In reality the iPhone is only a semi-smart phone. It has a touch screen, a phone book, a calendar, and software that can be installed only after it passes inspection by mothership at Apple. Granted, those installable programs can only be run one at a time as multitasking is not implemented aside from a rudimentary task switching among select native applicaitons. Nokia's S60 OS may not show off as much in the way of flashy knick knacks, but when it comes down to actually doing what you want to do, it's superior to the iPhone OS. It's that simple. Naysayers and trash-talkers of Nokia will typically have little actual experience with the devices. In most cases it's because they've been bought by advertising before they've relized what they're missing. Reality Distortion Field (RDF) is the best way to describe the Jobs effect. He spouts off comments with his own spin while telling his followers what he wants them to believe. Regardless of whether or not it's true, the followers take it as gospel. I give the man credit; he has a way of misleading people that is second to none.

    It comes down to this: If you think "smartphone" means a phone that can browse the web, then by all means get an iPhone. If you want a device that is a true PC supplement providing an incredible feature set, then don't get an iPhone. Many have been made to believe that the iPhone is a "smartphone," when in reality it's simply a hog-tied phone that has been limited by it's manufacturer to keep it from doing much of any value aside from letting you visit websites. On S60 I can be on a call with a bluetooth speaker/headset with someone who is sending me an email attachment to check. I can open that email, modify the attached file as deeply as I'd like, and forward the revision without having to choose one task or the other. If I'm listening to internet radio and a call comes in, the radio will mute while I'm on the call and resume afterwords. For that matter, I can do something as simple as listen to internet radio, such as last.fm, while browsing the web or managing my files or getting directions to a restaurant. I could even go as far as having open a document, listening to internet radio, have the web open, and checking directions all at once. These things are not possible on the iPhone. For a person who wants a truly powerful device that is not limited by the overlords, do not get an iPhone. There are better, more aptly-named "smartphone" options out there.

    One a financial side, the only thing that fewer devices at higher profit shows me is that Apple makes stuff cheap and sells it high. Capitalism is wonderful, and I'm impressed that Apple has managed to get so many people to buy it's wares. In the end, though, I'd rather have 127 million every day folks as friends than 15 million over-spending followers.

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