Nokia began corporate life chipping wood into pulp in the middle of the last century in the middle of the forests of Finland. Its present position at the epicenter of the global telecommunications explosion demonstrates a degree of resilience and adaptability that should also translate into state-of-the-art investor communications. And it does. This year Nokia walked off with the prize for best European company IR in the USA at the Investor Relations magazine US Awards.
A transatlantic IR team is the key. Martin Sandelin, heads the worldwide IR effort from Nokia’s Americas headquarters in Dallas, Texas, while Ulla James, looks after European investors from Helsinki, where the company is still based. The accounts may be in Finnish markkas, but the annual meeting is multilingual – no great shakes for a global company that issues quarterly releases in seven different languages.
Sandelin easily explains the urge to appeal to other markets – both in sales and investor relations terms. ‘It’s because we come from such a small country. When your domestic market is so small, a country with just 5 mn people, you have to create your opportunities outside – and last year we generated 95 percent of our sales outside Finland.’
Sandelin started with Nokia on its infrastructure business side in 1983. He was handling its corporate communications in Helsinki when he was tapped to build the investor relations structure in 1995. ‘It was,’ he says, ‘partly in response to a wish to grow the shareholder base outside Europe, but also in response to the existing growth from 1991 onwards, in Europe and the US. And the NYSE ADR listing in the second half of 1994 gave us a very convenient vehicle stateside.’
He suspects his wide experience of the company’s businesses and their worldwide operations were his qualifications. Once appointed, Sandelin decided against setting up the IR shop in New York to keep in better touch with developments in the business. ‘This is such a fast changing field, I thought it was imperative to be close to where the business is being done to be able to discuss it meaningfully.’ In Texas he also has Audrey McGinnis as IR manager, who pays particular attention to retail investors.
Ulla James, on the other hand, was an engineer with Nokia before getting her MBA in international accounting. She then went on to hold several controllers’ positions before switching into IR. ‘Nokia moves people around so you can grow with the company,’ she explains.
Their different backgrounds mean that they complement each other on more than just geographical grounds, James explains. ‘If US analysts, for example, want to go into the accounting principles, then Martin can refer them to me. On the other hand, his experience in communications means he has an excellent ability to explain technology in laymen’s terms.’
Sandelin points out another benefit of bicameral IR. ‘It allows us to have a quick turnaround time. I can get a question at the end of the day, send an e-mail to Finland and have the answer back first thing the following morning.’
Grow, grow, grow
On both sides of the Atlantic, and indeed the Pacific, the IR imperative is the same: expand the shareholder base. There are now 100,000 US shareholders, holding 50-60 percent of Nokia’s stock. Asia accounts for another 5 percent, and 50,000 Europeans make up the rest. Finns themselves hold less than a quarter of Nokia. ‘Interest is constantly growing, even without targeting,’ says James. We have so much market demand, investors visiting, brokers wanting us to visit clients, responding to analysts, but we have been targeting retail investors. We really want to build up the retail base.’
‘We haven’t quantified the target – other than that we want to become a broadly held company here in the US,’ Sandelin adds. As we spoke, he was on his way to Chicago for NAIC sponsored meetings. Such activities have doubled the individual shareholder base in the US alone. The retail emphasis is a mixture of marketing and trying to avoid too much volatility.
Perhaps coming from a Scandinavian culture of solid, long-term holders to the churning US markets makes even the cosmopolitan Finns slightly nervous. ‘After all we are a young company on the NYSE,’ says James. ‘We have a fundamental belief that there aren’t good and bad investors. But it’s good to have a wide range.’ Sandelin concurs: ‘We don’t flinch from momentum players, because we’re relatively broadly held on six exchanges: Helsinki, London, Stockholm, Frankfurt, Paris and New York. We do business in 130 countries. Investors who want geographical diversity, dividends, strong growth, or positive cash flow, can all get what they want from us.’
James wants to widen the European investor base, currently concentrated in Scandinavia and Britain. She sees the single market already increasing interest, and is pleased that Nokia is in the Euro Stoxx 50 index, which is raising attention in continental Europe.
There’s a downside, though, in terms of personal wear and tear. ‘I end up travelling more,’ says James. ‘Before, London, Stockholm and Helsinki took up most of my time, but now there is much more interest in France and Germany, as the equity culture is changing and telecoms has become a hot area with deregulation and privatization. With 23 percent of the company’s sales, Asia is the next big target for stockholders – although just now may not be the best time to start.’
Plugged in
The overall IR effort is tied closely to brand management, on the assumption that the hand that holds the dividend statement is also likely to hold a Nokia handset and vice versa. Sandelin says that ‘the IR function also helps in defining and creating the brand, the fact that they have firsthand experience of the brand and personal experience of the quality of the company’s products. And that’s important in any region we’re talking to.’
But being multinational requires some tightrope walking as well. ‘Finnish rules oblige us to make forward-looking statements, but in the US a lot of companies daren’t get too specific in their statements,’ explains Sandelin. ‘We’re also well aware that we are a non-US company and our official accounting currency is the Finnish markka. Obviously these aren’t insurmountable barriers, but it’s still an obstacle to investors and analysts. However, the personal experience of the brand mitigates that.’
Brand roots
Nokia may be moving across the world faster than tumbleweed in a twister, but it is also sedulously sinking its brand roots. The company not only sponsors the Sugar Bowl, it is currently sponsoring a tour by country and western singer George Strait, complete with pavilions providing both product and investor information for the fans. There are no discounts on seats for shareholders, ‘but they can get an annual report,’ Sandelin smiles, adding: ‘Four years ago, if someone had told me I would be driving around Texas, listening to country and western music – and actually enjoying it – I would not have believed them.’
Equally useful for the brand push is product placement, ensuring that the characters in films like the latest Saint movie and TV shows like the X-Files, use the appropriate handset. Other more traditional, if less musical, IR activities include the retail meetings held by NAIC, institutional presentations and conference calls – where quality is key: ‘Our concern is that for the hour-and-a-half everyone who dials in will hear and understand what is said,’ says Sandelin. ‘We want to ensure that nobody gets dropped in mid-call, that there is no echo, and that everyone is treated fairly during Q&A regardless of geographical location.’
The IR team are keen to meet their audiences firsthand, too, of course. Each spring as the cowpokes go on the trail, Nokia takes its global roadshow out to venues in the US and Europe. In the fall, they mount ‘a sort of annual global analysts’ investor day’ rotated between Europe and US, which aims to give its audience a comprehensive longer-term look at the market, the technology and the company.
Instant access
Since Nokia’s CEO, Jorma Ollila, set up the IR function, it is hardly surprising that the IR department has access to him ‘any time of the day or night,’ although Sandelin formally reports to the CFO in Helsinki. For US purposes, there are very senior management in North America, but executives from headquarters frequently reinforce them. Indeed, they also make US management available abroad. Above all Sandelin says, ‘Nokia is non-hierarchical and informal, with ease of access. The willingness of everyone to help out, at every level, from engineers upwards is very high.’
Sandelin stresses firmly that everyone gets the same priority for answers – individuals, institutions and sell-side analysts – and he seems to have no particular favorites among the 50-plus analysts following the company. They do see differences in questions from different continents, however. The same information needs packaging differently and ‘even the English is different,’ he says.
These differences manifest themselves in several ways. James thinks that while US holders are interested in the long term, they still focus far more on the quarterly numbers, than their counterparts overseas. ‘Finnish investors are more long-term, not worried about quarterly figures. Non-Finnish Europeans are somewhere in between.’ However, on both sides of the Atlantic, while the numbers are the key interest for most investors, they want to understand the technology.
Pushing the message
Of course, that technology is also helping Nokia push its message out. The company’s web site is maintained with great attention to detail. Quarterly statements are on the web within seconds of the stock exchanges receiving them. ‘Because of the time difference for many investors and analysts the web has become the first choice,’ says Sandelin. ‘A lot of people on the west coast check it from their homes.’ He credits the IR web site’s success to its high quality design (done back in Finland, of course) that allows the data tables to be downloaded into spreadsheets. ‘The easiest way for analysts to work on their own models is to grab the whole thing and download it into their own spreadsheet.’ Even so he finds that analysts still talk on the phone or want information faxed. Relatively few rely on e-mail except for very brief factual questions.
In short, both Sandelin and James consider Nokia’s IR function to be extraordinarily dedicated. ‘We don’t handle press releases, the quarterly statement or annual report. Of course we have input into them, but the hard work of writing, translating, printing and distribution is handled by our corporate communications people. In practice that means we can spend more of our time talking to analysts and investors.’ And that, it seems, is what it’s all about.
