MCI<6781.T>handsets in danger of missing 3G launch
--From AOl.-- Cooters
TOKYO, Feb 9 (Reuters) - Japan's biggest cell phone maker, Matsushita Communication Industries Co Ltd, already reeling from a delayed product launch and a profit warning, is now scrambling to be ready for the start of key "3G" next-generation wireless services.
"It's true that we're a little bit behind schedule," Osamu Waki, an MCI director in charge of 3G (third-generation) handsets, told reporters on Friday. "But somehow or other we'll make it."
Although a number of handset makers are working on cell phones capable of offering moving pictures and other advanced features of 3G, expected to be launched in May by Japan's dominant wireless carrier NTT DoCoMo <9437.T>, the pressure is on MCI as industry leader to play its part in 3G's lift-off.
"We're putting all our resources into this project," Waki said. "If we can't make it in May, DoCoMo will literally kill us."
But analysts, for their part, were sceptical MCI could meet the deadline.
"I think the May launch has become very difficult," said Kazushige Hata, an analyst at ING Barings. "Even Java-compatible handsets were delayed for two months, and W-CDMA (wideband code division multiple access, or 3G) phones are lot more complicated."
MCI's group net profit fell 40 percent year-on-year to 5.2 billion yen ($44.55 million) for the three months to December, partly dragged down by delays in introducing Java-compatible handsets that enable users to download games or shop online.
Mamoru Takagi, an analyst at Societe Generale Securities, said not only might MCI miss the 3G launch, but added: "Even if MCI launches 3G phones on time, I'm not so bullish about demand."
He noted DoCoMo's own projections of a modest 150,000 subscribers to 3G in its first year, compared with the 45 to 47 million mobile phone handsets sold every year in Japan.
NTT DoCoMo said there are several handset makers working on 3G phones, but analysts said MCI would ordinarily be one of the few firms capable of rolling out products on time.
BAD NEWS ABOUNDS
They added that MCI's efforts to push 3G as well as Java-compatible handsets would likely be hampered as carriers try to reduce inventories before selling new models.
Carrier inventories in Japan reached 11 million units as of the end of December, up from 8.5 million units at the end of September, according to Merrill Lynch.
Also creating headaches for MCI is slow growth in the European market for WAP (wireless application protocol) handsets, which allow users limited access to the Internet but have so far generated little interest among consumers.
Makio Inui, analyst at Nikko Salomon Smith Barney, said MCI cannot leverage its feature-rich handsets unless the WAP market grows.
"The best answer may be to call it off. MCI should wait until the European markets become mature," Inui said. "But MCI doesn't give up even when they are bleeding red ink, and the financial markets don't like that."
Slow sales in Europe were a key factor behind MCI's profit warning on Wednesday, which accompanied the disappointing earnings announcement for the October-December quarter.
It lowered its net profit projection for the year to March by more than 10 percent to 38.50 billion yen.
Investors responded by sending MCI's share price sharply lower. MCI on Friday briefly slipped to an 18-month low of 9,500 yen, down nearly 30 percent since the profit warning, although it managed a modest bounce to end the day at 10,420 yen.
MCI also pulled several Japanese electronics components makers lower in its wake, with Murata Manufacturing Co Ltd <6981.OS>, a popular share among foreign investors, sliding nearly 10 percent over the past two sessions. Murata ended at 11,300 yen on Friday, down 1.82 percent on the day.
MCI nevertheless remains hopeful that Java handsets, which finally hit the market in late January, and the introduction of 3G services will boost its revenues.
The company has said it will also seek growth opportunities in overseas markets, aiming to expand its share to 10 percent in the global mobile phone market from six percent.
06:23 02-09-01 |
