Nokia Displays New Phones at Cebit, Aims to Retain Market Share
By Philip Lagerkranser
Stockholm, March 9 (Bloomberg) -- Nokia Oyj, under pressure to retain market share and boost its stock price, must show a range of new mobile phones, including more models with color screens, at the Cebit technology fair next week, investors said.
Shares of Nokia, which makes one in every three handsets, fell 41 percent in 2001 as wireless industry sales declined for the first time ever. Rivals such as Sony Ericsson Mobile Communications Inc. have been quicker to introduce advanced models, fuelling concern they may erode Nokia's market share.
``Nokia mustn't lull itself into thinking it will automatically keep its share of the market,'' said Sami Sormunen, who helps manage 250 million euros ($220 million), including Nokia shares, at Pohjola Fund Management Co. in Helsinki.
The No. 1 handset maker is betting features such as permanent Internet links and color screens will kick-start handset sales this year. At the company's Cebit press conference on Tuesday, investors and analysts will be looking for signs that they can deliver.
Nokia expects to introduce 20 new models in the first half, compared with 14 in all of 2001. Yet it disappointed some analysts and investors when it showed just one -- without a color screen -- at an industry fair last month. Sony Ericsson, a venture between Ericsson AB and Sony Corp., this week introduced three models with color screens.
Selling Out
Sony Ericsson's T68, the first phone to combine faster Internet access with a color screen, has been so popular that it almost sold out in Europe, retailers have said.
The five-month old venture this week showcased the T68i, an upgraded version of the T68. The phone comes with Multimedia Messaging Service software, allowing users to send photographs and sound bites.
Nokia has ``to equalize the balance,'' said Alexander Shalash, a fund manager at Swissca Portfolio Management AG in Zurich, who holds shares in Nokia and Ericsson. ``They don't want to be seen as a follower.''
The Finnish company has presented one version with a color screen. Nokia's 7650 is almost twice as heavy as Sony Ericsson's T68, making it less appealing, analysts said. It will reach stores in the second quarter.
Nokia has said it is focusing this year on technologies such as the Java programming language, Extensible Hypertext Markup Language and packet switching that make innovative features possible.
``It doesn't take a rocket scientist to figure out that our announcements (at Cebit) will have something to do with those technologies,'' said Nokia spokesman Tapio Hedman.
`GPRS'
Lagging rivals hasn't hurt the former rubber maker's market share before. Motorola Inc., the No 2. cellular-phone maker, introduced phones that support the General Packet Radio Service standard, more than nine months before Nokia. Ericsson and Siemens AG also were quicker to introduce GPRS, which transmits data at 10 times current speeds. The Finnish company started shipping the phones in October.
Even so, Nokia in January said its market share widened to 37 percent last year from 32 percent in 2000. The company aims to capture 40 percent of the mobile-phone market.
Investors also will be watching closely for Nokia's trading statement Tuesday. The company's new phones and an economic rebound may help Nokia raise its first-quarter earnings forecast, investors said.
Nokia in January said first-quarter profit will fall as much as 32 percent to between 15 cents and 17 cents a share, with sales sliding as much as 10 percent from a year earlier.
The company's next stand off with rivals will be over phones that offer so-called third-generation services. Nokia will introduce and start selling its first phone based on Universal Mobile Telecommunications System, or UMTS, technology in the third quarter, Hedman said. Some investors had expected Nokia to present its UMTS models at Cebit.
Sony Ericsson hasn't said when it will preview UMTS phones, which send data at 40 times faster than current phones. The venture said this week it is ``well on track'' to start selling UMTS models this year.
``Investors expect Nokia to be able to say that it can beat Sony Ericsson in making the first third-generation phone available,'' said Mika Heikkinen, a fund manager at FIM Asset Management Ltd. in Helsinki. ``If there are no major differences between Nokia's and Sony Ericsson's new models, then the importance of getting a phone out first increases.''
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