Mobile Earnings Redux
By Carlo Longino, Thu Jan 22 20:45:00 GMT 2004

Updated: Earnings have come in from several mobile companies, and not surprisingly, the money's in handsets.

Five of the top handset manufacturers have reported their figures from the fourth quarter of 2003 in the last two weeks, and all of them saw strong sales in the run-up to the holidays, though some had more success than others. As we told you earlier in the week, Sony Ericsson reported their strongest quarter yet, with sales volume up 13% and revenue up 16%, and Samsung said last week it shipped 15.5 million handsets, a 34% increase.

Nokia followed this week with some tremendous numbers, with overall profits up and handset sales up 20% from a year ago. The company added it had become the top brand in the United States, as well as the top GSM brand in China, pushing its global market share to 38%. Nokia sees the overall handset market growing by 10% in 2004, and although it's seeing strong sales volume and selling prices, the strong dollar will continue to weigh on earnings. The company also said it forsees a flat to slightly improved network equipment market this year, showing some signs of recovery.

Clearly Nokia was better equipped than some of its rivals to handle the strong demand for new handsets towards the end of 2003, where companies like Motorola were caught out by component shortages. Moto saw a much higher than expected overall fourth-quarter profit, but its handsets sales were off by 3% as it couldn't meet market demand and capitalize on strong industry-wide sales. The company says its average selling price increased by 4%, however, and says orders were up and it sees Q1 2004 handset sales 20-25% higher than last year.

German manufacturer Siemens looked to make up some ground on Motorola and the other handset makers ahead of it, reporting strong fourth-quarter sales from its mobile unit. The company shipped 15.2 milion handsets, up 38% from a year ago, and doubled its profits from the mobile business, with market watchers saying both it and Sony Ericsson saw a lot of success in Europe from mid-level cameraphones, where it's trying to weaken Nokia's grip on the market. Siemens' CEO also said he sees some slight growth in the infrastructure market this year.

Lucent was happy to announce its second consecutive quarterly profit, coming after 13 straight losing quarters. The company's wireless business was up 51%, and it said there are sure signs of recovery in the market. It did not, however, increase its first-quarter estimates, disappointing investors looking for some positive reinforcement.

CDMA giant Qualcomm posted another solid quarter, its quarterly profit up 46% on increased licensed and royalty figures and strong chip sales. The company also predicted another good year, saying it expects sales of CDMA phones to increase 27%, although it sees a 7% decrease in the average price of the handsets. Analysts estimate Qualcomm's patents earn it 4% of the price of every CDMA handset, so the sales increase should more than offset declining prices.

In an interesting sidenote, AT&T Wireless and Cingular, US carriers that are in merger talks, both gave disappointing quarterly results this week. AT&T posted an unexpected loss, and saw its average revenue per user fall 2.2%. The company also added a net of only 128,000 subscribers in the quarter, and saw churn of 3.3%, coming on the back of some serious operational problems that plagued the carrier during the quarter. The company looks to have been hit hard by new rules allowing number portability, with CEO John Zeglis noting, "We do have pent-up demand of customers that have been with us for a while that want to switch carriers if they can take their numbers."

Cingular faired a little better, seeing its revenues rise but its profits drop. The company added 642,000 net subscribers in the quarter on 2.8% churn, but at a cost, as its ARPU fell $2.81, or nearly 6%.

Update: Microsoft reported its fourth-quarter figures, with revenues up nearly 20 percent on strong one-time license sales, though profits were hit by expenses from a changed stock compensation plan. Revenues in its mobile division were up 40% to $68 million.