HELSINKI, FINLAND -- A walk through the streets of Helsinki is like nowhere else in the world.
In sharp contrast to the historic backdrop provided by this city's ornate and imposing architecture, a carryover from its rule by the Russia czars from 1809 to 1917, its streets are filled with thoroughly modern people constantly jabbering on cellular phones.And not just people in business attire. Grandmothers. Children. Folks in work clothes. People with groceries in their arms. Old men with canes. Streams of people braving freezing temperatures and gingerly stepping around snowbanks, all the while holding cell phones to their ears. At one traffic light, I counted eight people either chatting on the phone or listening intently as we waited.
Nearly 60 percent of Finns now own cell phones, compared to 25 percent of Americans. The number of cell phones in Finland has surpassed fixed-line phones, a precedent inspirational to all cell-phone manufacturers.
Nearly one-quarter of the world's cell phone handsets today are made by Finland's own Nokia Corp., whose stock constitutes half the asset value of the Helsinki stock exchange. It wrested leadership of its competitive field from Motorola Inc. in spectacular style -- operating profits last year up 75 percent, sales rising 51 percent and split-adjusted earnings per share increasing 66 percent.
Expecting mobile phone penetration in a number of countries to eventually reach 100 percent, the company has been providing a steady flow of slick new handsets to keep things fresh. Most recent are the breakthrough Nokia 7110, which permits Internet access, and the budget-priced 3210 expected to attract young customers.
Behind Nokia in sales are U.S.-based rival Motorola Inc., which stuck too long with analog rather than digital technology, and Sweden's L.M. Ericsson Telephone, stalled by less-than-inspired recent models on dealer shelves.
Yet no one at Nokia is gloating. Everyone knows 1998 is a tough act to follow. The competition is smart, the business tricky. Execution is vital.
"My daughter, who used to be on the national team for gymnastics, says that when you do a vault on a balance beam and feel really good about it, you must quickly put it out of your mind or you'll be sure to fall in your next vault," said Jorma Ollila, 48, the president and CEO of Nokia, who took time to talk with me at the company's two-year-old glass-and-steel headquarters in Espoo as he prepared for the following day's annual meeting. "This company must continue to execute well without becoming complacent and feeling too good about what we've done."
Expecting the company's mix of 60 percent mobile phones and 40 percent telecommunications infrastructure and other products to remain the same for a while, Ollila stresses flexibility in preparing for the future convergence of technologies. There will also be ongoing acquisitions of relevant businesses and a lot of shifting around of key executives.
"If people stay put in positions for years, they become stale, soft, believing too much in their ideas because they're continually mulling the same mixture," said Ollila.
Nokia has been listed on the New York Stock Exchange as an American Depositary Receipt since 1994 and more than half its shareholders are U.S.-based. It is therefore more driven by shareholder value than typical large, bloated European firms that think only "big picture" and are mostly concerned with opulent management quarters.
"It's a fact of life that we intend to grow 25 (percent) to 30 percent each year, that we have high requirements of research and development, that our marketing is important and that we must excel in management and logistics," asserted the pragmatic Olli-Pekka Kallasvuo, executive vice president and chief financial officer, who divides his time between Finland and Dallas. "I don't spend time worrying about it."
Selling products in 130 countries, Nokia must have worldwide research and development capabilities. It has manufacturing centers in Finland, Dallas and Asia (Korea and two Chinese factories). The recently expanded Salo, Finland, plant that I visited has eight production lines making several handset models, including one for Japanese featuring the ultra-steamlined, shiny platinum style popular there.
The investment community feels that Nokia is setting an example for its industry, a spirited one in which rivals inevitably counter with nifty handsets of their own.
"Nokia came out with phones more attractively designed and functional than competitors and makes sure it has appropriate handsets for specific market segments," noted Sean Faughnan, analyst with J.P. Morgan in London. "The long-term outlook for Nokia stock remains strong, our only reservation being that its shares are at a high multiple and the company faces tough profit comparisons the second half of the year."
With only 4 percent of its sales coming from its small home country, Nokia must try to keep a step ahead worldwide.
"Besides coming to the market early with digital handsets, Nokia correctly estimated the size of the mobile phone market so it could meet demand," concluded Wojtek Uzdelewicz, analyst with SG Cowen & Co. in Boston, who recommends both Nokia and Motorola. "It also successfully bet on the more efficient three-volt technology, rather than the previous six volts."
Faughnan and Uzdelewicz are neutral near-term on Ericsson stock, yet confident about its longer-term prospects in such a high-growth business.
Andrew Leckey, a financial news anchor on the CNBC cable television network, answers questions only through the column. Address questions to Andrew Leckey, "Successful Investing," 98 Henry St., Dept. 183, Brooklyn, NY 11201 or by e-mail at successinv@aol.com.