Moto Reaction & Looking Ahead to Q1 Share and Nokia ...
... with reporting almost a month away. Reuters Tarmo Virki reports ...
• Researcher Strategy Analytics is expecting the cellphone market to grow to 271 million handsets in January-March, up 20 percent year-on-year, the same pace as in the previous quarter.
• Credit Suisse expects Motorola's market share to drop to 17.8 percent in the first quarter from the 22 percent it achieved in the fourth quarter of last year.
Tim Luke of Lehman Brothers commented in a MOT report today ...
• With continued execution challenges in Mobile Device business, Motorola now expects overall 1Q sales in a range of $9.2-$9.3B. The difficulty appears to be largely a company specific handset challenge rather than a market challenge.
• While unit and ASP commentary for the Mobile Device business were not outlined, we estimate handset units fell to ~46-48M units this quarter, and ASPs may have fallen to ~$113 in the quarter. This compares to very strong unit shipments of ~66M in 4Q06. Clearly from a sell-in share perspective, Motorola’s share is likely to fall quite dramatically from 4Q levels.
• Motorola Mobile Device Difficulties Largely Internal; Continue to Expect Solid Performance from Nokia ... We expect that Nokia (co-covered by Lehman Analyst Stuart Jeffrey) will report 1Q results on April 19th in line to possibly slightly ahead of our estimates of EUR10.1B in revenues and EUR0.25/$0.32 in EPS. Recent market data points suggest 1Q07 handset market levels of down 10-15% appear broadly on track - in line with normal seasonality. While clearly a stronger than anticipated 4Q06 for Nokia in handsets could suggest a 1Q range at the higher end of this band, a somewhat more benign competitive environment following Motorola’s difficulties yesterday could suggest some upside vs our current –12% QoQ handset unit estimates.
Comment: I expected Nokia to give back some share after a spectacular Q4. They usually do in Q1. They may pretty much hold share and possibly even see a slight gain. Mix driven margins will be key.
>> Nokia, Others Gain as Rival Motorola Struggles
Tarmo Virki
Reuters (Helsinki)
March 22, 2007
tinyurl.com
Shares in Nokia (NOK1V.HE) rose sharply on Thursday as investors saw the world's biggest cellphone maker benefiting at the expense of closest rival Motorola Inc (MOT.N), which warned of weak sales and profits.
Analysts said it was likely that Finnish-based Nokia and other handset makers had won market share in the first quarter, as Motorola struggled at the cheaper end of the market, while the global market continued to grow briskly.
Nokia stock was up 3.5 percent at 17.31 euros by 1345 GMT, with smaller handset makers and subcontractors also gaining. Shares in Motorola (MOT.N) opened almost 5 percent lower in New York.
"Likely all Motorola's rivals have benefited," said FIM Securities analyst Raine Vammelvirta in Helsinki. "Nokia has an efficient production system and thanks to that has likely gained market share."
Researcher Strategy Analytics is expecting the cellphone market to grow to 271 million handsets in January-March, up 20 percent year-on-year, the same pace as in the previous quarter.
"We are not really hearing anything contrary to that," said analyst Neil Mawston from Strategy Analytics. "Motorola's problems seem to be more associated with internal pricing rather than global markets."
Credit Suisse advised its clients to consider a trading buy in Nokia stock, due to Motorola's problems, though it stuck to its longer term "neutral" rating on the Finnish company.
The investment bank said it expects Motorola's market share to drop to 17.8 percent in the first quarter from the 22 percent it achieved in the fourth quarter of last year.
Motorola said on Wednesday it would post a first-quarter loss and that its 2007 outlook was "substantially" worse than expected, due to weak handset sales.
It said it was hurt by a difficult pricing environment, particularly for basic models, and a limited portfolio of more sophisticated phones.
Samsung Electronics (005930.KS) stock closed 0.5 percent higher in Seoul, while Ericsson (ERICb.ST) was 2.5 percent higher in Stockholm.
Shares in Nokia subcontractors also gained on hopes of higher volumes, with phone casing maker Perlos (POS1V.HE) up 2.1 percent and manufacturing services firm Elcoteq (ELQAV.HE) 1 percent higher.
Motorola has struggled with a sharp fall in phone prices as it has tried to hold onto market share amid stiff competition in emerging markets and against industry leader Nokia.
Nokia has felt the benefits of an early entry into emerging regions, where it often has market shares of more than 50 percent due to an efficient distribution system.
That has helped the firm to continue to increase sales as more developed markets have matured.
Nokia said earlier this month it expects sales of replacement phones to make up about two thirds of total global handset sales this year. ###
- Eric - |
