is not like those other guys.
The world's leading cell phone maker announced today it would keep costs down and its lead in handsets up by sending production of handsets to plants in Mexico and South Korea, cutting some jobs in America.
For the most part, though, those plants are its own. That's where it departs from some of its rivals, who are hoping that contract manufacturers can do it for them cheaper.
Last week Swedish cell-phone maker
( ERICY) decided to hand over virtually all the handset production to contract manufacturer
. And last year Motorola agreed to a multiyear deal that would outsource production on some of its products, including cell phones, in a deal that was to reach $10 billion per year by 2006.
Nokia, announced earnings Tuesday that beat Street estimates but reported it expected slower growth in the coming quarter. It has drifted 7.6% since its report and closed lower today, down $1.67, or 4.9%, to $32.70.
Outsourcing has become a trend in manufacturing that has big hardware makers finding economies in farming out the production of their products to contract manufacturers such as Flextronics,
( SLR) and
, who can do it cheaper.
Nokia has a good reason not to hand over production. It's leading the field by doing it on its own. And it is doing that by concentrating on both production and design.
"Their operating margins tell the story," said analyst David Heger of
Compared with Ericsson's minus 14% operating margin in handsets and Motorola's 2% margin there, Nokia has an operating margin of about 20%, Heger said. Heger's company has done no underwriting for Nokia. He rates the stock a buy.
With three times as many cell phones sold as its rivals, Nokia has economies of scale working for it. It also designs for economy and productivity.
It was widely speculated that some of the production that is moving out of the U.S. will be shifted to South Korean contract manufacturer Telson. But that may be more of a strategic move than a cost-competitive maneuver.
Heger said Nokia's use of Telson will give it a better run at the South Korean cell-phone market, where it has been relatively less energetic.
The Nokia announcement was perceived as a win for wireless company
, since Telson uses Qualcomm chipsets to make some types of cell phones, a possible signal that Nokia would use the same chips in other production lines.
Qualcomm closed higher, up $1.63, or 1.9%, to $86.88.