Q1 Doesn't Look Bad, From The Top
By Carlo Longino, Thu Apr 21 20:45:00 GMT 2005
Earnings from the world's top two handset vendors are in, and they paint a much rosier picture than last week's numbers from a couple of their competitors.
Sony Ericsson and Samsung both reported last week falling sales and profits, painting a cloudy picture for first-quarter handset sales. But it looks like they were just losing out in the quarter to Nokia and Motorola, which both saw big jumps in revenues and earnings.
Nokia saw double-digit increases, keeping pace with the 20 percent global growth in the handset market globally in the first quarter, a far cry from last year when it struggled to keep up with the booming market and consequently lost significant market share. The company grew sharply in Asia -- particularly in China, now its biggest market -- offsetting sluggishness in North America. Nokia was also able to halt a slide in average selling prices.
Motorola's strategy to emphasize high-end products looks to have paid off, with a nearly 10 percent rise in revenues fueling a 48 percent increase in profits showing the company's been able to deal with Nokia's price-cutting, something that's eluded Samsung and Sony Ericsson.
Both companies also gave bullish outlooks for the second quarter, casting some doubt on Samsung's milder forecast for its fortunes. The relatively old guard of handset vendors -- Nokia and Motorola -- look to have reversed last year's gains from the upstarts, Samsung and SE. And as for doubts the overall market was cooling off, Nokia said it now estimates 740 million handsets will be sold this year, up from previous estimates of roughly 700 million.
Nokia CEO Jorma Ollila did say there was "some weakness in 3G devices," echoing sentiments from Qualcomm, which reported higher year-on-year earnings and sales in the quarter, but gave a downbeat forecast for the balance of the year, blaming sluggish WCDMA handset sales. Carphone Warehouse, Europe's largest independent handset retailer, expressed similar sentiments last week, though its CEO expects 3G to "go mad" in the run up to Christmas.