UPDATE - Nokia to start making CDMA phones in China
Reuters, Monday March 31, 5:40 am ET
By Brett Young
biz.yahoo.com
(Adds details, comments, updates share price)
HELSINKI, March 31 (Reuters) - The world's top handset maker Nokia (NOK1V.HE) took steps on Monday to wrest from Motorola (NYSE:MOT - News) the top spot in the huge Chinese market by starting CDMA handset production there and merging its joint ventures.
Nokia said it would have over 60 percent ownership in the newly combined company, which will be headquartered in Beijing.
"The new company is well positioned to lead China's mobile handset and network markets as well as improve its competitiveness in the global market," Nokia said in a statement.
"(It will be) one of the largest foreign invested enterprises, as well as the largest manufacturer and exporter in the mobile telecommunications industry in China," Nokia said.
Nokia already dominates the world's largest mobile standard, GSM, but has lagged on phones using CDMA, or Core Division Multiple Access, which is popular in Asia and the United States.
The company said earlier this month it wants 15 percent of the CDMA market in 2003 as a prelude to eventually leading the market with over 25 percent.
Nokia had a 2002 global handset market share of around 36 percent.
A Nokia spokesman said the merging of the joint ventures still needed Chinese regulatory approval, but this was expected soon. He said the company was currently happy with the size of its shareholding in the merged venture.
Nokia's 2002 sales in China, the world's largest mobile phone market, were 2.8 billion euros ($3.01 billion), making the country its third-largest market behind the U.S. and U.K.
Nokia stock was unruffled by the announcement, which had been rumoured in the past week, and traded down 5.4 percent at 12.89 euros as European shares continued to fall on fears that the war in Iraq would drag on.
RIGHT STEP
Analysts welcomed the news, saying that while it would take time for the moves to bear fruit, it was a step in the right direction and would help Nokia battle Motorola as well as local Chinese rivals.
"Nokia has to come up with something to counter the market share loss to local players," said Evli Bank analyst Karri Rinta, who has a "buy" rating on Nokia shares.
"I'd expect to see meaningful handset volumes no sooner than the fourth quarter of this year. The big impact will be seen next year," he said.
Rinta also said Nokia's plan to use its own CDMA chipsets in the phones instead of those of U.S. rival Qualcomm (NasdaqNM:QCOM - News) removed some uncertainty in the market. |
