Q. I am disappointed with the performance of my Nokia Corp. shares this year. Will they be doing any better? - LH

A. The world's largest maker of mobile phones recently signed a major deal that could boost its lagging US sales.

It signed a 15-year licensing deal with chipmaker Qualcomm Inc., settling a costly legal dispute that had made US phone carriers postpone their dealings with Nokia. Although Nokia will pay a lump sum and ongoing royalties for advanced mobile patents such as 3G technology, the amount is lower than Qualcomm previously sought.

"It's a big relief for everybody," said Rick Simonson, chief financial officer for Nokia, which also signed over some of its own technologies to Qualcomm.

And the Finnish company completed its $8.1 billion acquisition of US digital mapmaker Navteq Corp. last month.

In addition, it is buying the 52 percent of shares it does not already own in London-based Symbian, the leading maker of operating system software for advanced phones. It intends to create an open-source foundation to give software to other handset manufacturers to increase overall market use of advanced products.

Shares of Nokia (NOK) are down 34 percent this year following last year's 89 percent gain, in part because investors feared the credit crunch and inflation would hurt the company. But Simonson said consumers have not been cutting back on communication.

The company, which increased its global market share to 40 percent during the second quarter from 38 percent a year earlier, expects sales volumes to grow by 10 percent or more this year. Unit growth is up significantly in Asia and Latin America, but flat elsewhere. In the US, Nokia ranks fifth in handset sales.

Consensus analyst rating on Nokia stock is "buy," according to Thomson Financial, consisting of eight "strong buys", seven "buys" and six "holds".

Nokia faces competition from South Korea's Samsung Electronics Co., Schaumburg Ill-based Motorola Inc., Japanese/Swedish Sony Ericsson, Sweden's LM Ericsson, Canada's Research In Motion Ltd. and Cupertino, California-based Apple Inc.

The declining price of handsets has squeezed its profit margins. The average price for a Nokia handset in the second quarter was $117, down from $143 a year ago.

For its coming "Comes with Music" service to be built into its handsets, Nokia has signed up Warner Music Group, Universal Music Group and Sony BMG Music Entertainment, with ongoing negotiations to add additional record labels.

Earnings are expected to increase 24 percent this year and 8 percent next year. Five-year annualised growth rate is projected to be 13 percent.

Q. I thought Bill Miller was supposed to be a genius. What happened to Legg Mason Value Trust fund? - MB, via the Internet

A. Fifteen consecutive years of outperforming the Standard & Poor's 500 ended abruptly after 2005, and the well-known fund hit the wall.

It was stuck with a concentrated portfolio that included a big stake in financial stocks such as Freddie Mac, Citigroup Inc. and Merrill Lynch & Co.

It also owned homebuilders, some disappointing technology plays and no energy stocks.

Investors noticed the tanking results.

A combination of withdrawals and declining value knocked this fund's total assets from $17 billion at the start of this year to less than $10 billion.

Legg Mason Value Trust fund (LMVTX) is down 40 percent over the past 12 months, down nine percent in annualised return over the past three years and virtually flat over the past five years.

All three results rank in the lowest percentile of large growth and value funds.

"Fundamentally the fund's approach is sound, and despite some mistakes, we're still impressed by its analysis," said Greg Carlson, analyst with Morningstar Inc. in Chicago, who considers it a core holding for patient investors who can handle volatility. "We recommend it and note that it recently has done well as stocks of banks and other financials have shown improvement."

Bill Miller has been portfolio manager since 1982 and Mary Chris Gay co-manager since 2006. Miller seeks firms trading inexpensively based on his estimates.

Although he often goes for turnaround plays, he does not avoid some pricey traditional growth companies.

The portfolio usually has 30 to 50 names, and Miller is willing to let favored names run a long time. Its concentrated nature can amplify blowups. Miller runs $30 billion in money overall, which could hamper his ability to tend to this particular portfolio.

Financial services and consumer services each represent about 22 percent of Legg Mason Value Trust's portfolio. Largest holdings are Amazon.com Inc., AES Corp., JPMorgan Chase & Co., Aetna Inc., UnitedHealth Group Inc., Yahoo Inc., eBay Inc., Sears Holdings Corp., General Electric Co. and Freddie Mac.

The "no-load" (no sales charge) fund requires a $1,000 minimum initial investment and has an annual expense ratio of 1.68 percent.

Q. What exactly is a stock's yield? How is it calculated? As a new investor, how does it matter to me? - VA, via the Internet

A. A dividend is a payment made to shareholders. Mature businesses such as utilities tend to pay higher dividends, while growth companies such as many technology firms often plow excess earnings back into the firm.

A stock's dividend yield is an annual percentage calculated by dividing the firm's annual dividend by its share price. For example, a $50 stock with $2 dividend has a yield of four percent.

"Yield matters most to investors hoping to generate income from their portfolio or protect themselves from volatility," said David Bendix, certified financial planner with Bendix Financial Group in Garden City, New York.

"If a stock is down but you're receiving a dividend, it cushions your losses."

Because yields go up when stock prices go down, which is frequently occurring in the current market, a high yield can merely be a function of a low stock price, Bendix said.

"Investors should also be aware that a company paying a high dividend may not be reinvesting as much back in the company," Bendix said. "That could mean less long-term growth potential."

Andrew Leckey answers questions only through the column. Address inquiries to Andrew Leckey, 555 N Central Ave, Suite 302, Phoenix, AZ 85004-1248, or by e-mail at andrewinv@aol.com.

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