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Technology Stocks : Qualcomm Moderated Thread - please read rules before posting -- Ignore unavailable to you. Want to Upgrade?

To: Dennis Roth who wrote (20100)	3/8/2002 9:44:19 AM
From: Ruffian	Respond to of 196654

Nokia and Ericsson network seen hit Merrill Lynch lowers 2003 wireless equipment estimates By Chris Nuttall, FT Investor Last Update: 8:15 AM ET March 8, 2002 LONDON (FT Investor) - Nokia has not even reached its first mid-quarter update of the year and the broker Merrill Lynch is already talking down its prospects not just for 2002, but 2003 as well. Nokia will reveal progress on handset and network sales next Tuesday, but Merrill reduced its estimates of what its corporate customers, the wireless operators, will be spending in 2003 in a series of reports on Friday. Shares in Nokia (SE:000053994: news, chart, profile) (NOK: news, chart, profile) and its rival Ericsson (SE:000010865: news, chart, profile) (ERICY: news, chart, profile) were both lower in generally positive European markets on Friday morning. Merrill says it is becoming increasingly concerned about wireless equipment spend in 2003. It already forecasts a 5 per cent fall in 2002 and now predicts a further 5 per cent fall in 2003, compared to its previous estimate of 12 per cent growth. This is despite operators sounding upbeat about future revenues in figures released this week. See previous Telecom Daily 3G further out Merrill cites four main reasons for its change in forecast. First, it thinks investments in 3G network equipment will be pushed further out due to a lack of exciting applications and services, as well as technical issues relating to roaming, interoperability and billing. It has also heard that phones that can handle the 3G WCDMA technology as well as GPRS and GSM will not be available in volume until late 2003. This is mainly due to technical problems surrounding the "hand-off" as users move between GSM and WCDMA base stations. Merrill believes in addition that some operators will deploy lower cost technologies that improve quality and capacity such as EDGE, rather than 3G systems in the near term. Finally, it sees pricing pressure accelerating, "given the current overcapacity in the industry, with 10 global players now fighting for what looks to be a smaller pie." Ericsson worst hit The impact will be greatest on Ericsson (UK:ERI: news, chart, profile), the number one in global wireless infrastructure sales, with its revenues far more dependent on network equipment than mobile phones. Merrill sees Ericsson gaining market share, along with Nokia and Siemens, but its Mobile System revenues in 2003 only growing at 3 per cent compared to its previous estimate of 14 per cent growth. Merrill reduced its 2003 EPS estimate for Ericsson to SEK1.00 from SEK1.41. For Nokia Networks, Merrill predicts 7 per cent growth compared to 13 per cent earlier, but only a 2.5 per cent reduction in EPS to €0.78 from €0.80, due to 75 per cent of the company's sales coming from handsets. For Siemens (DE:723610: news, chart, profile) (SI: news, chart, profile), growth for wireless infrastructure is cut to 5 per cent from 8 per cent. Merrill thinks Siemens, helped by its relationship with NEC, is continuing to gain market share and has the potential to be a strong number three competitor to Nokia and Ericsson. Q1 optimism ABN Amro said on Friday it was optimistic about Nokia's mid-quarter update. "We believe the market has underestimated the company's ability to keep a low costs base, with still declining component prices and a weakening yen," it said Nokia has left itself room to deliver a positive surprise. In January, it predicted sales would decline by 6 to 10 per cent in the first quarter, compared with a strong Q1 in 2001, with Networks down 16 to 20 per cent and phone sales down by 3 to 7 per cent. Pro forma EPS was predicted at €0.15-0.17. See January results story ABN Amro says Nokia should restate this guidance, but could even be more optimistic. Nokia said in January it would be releasing around 20 new phone models in the first half and the CeBIT trade fair in Hannover should be the venue for a number of launches next week. ABN Amro expects to see a low-end handset capable of multimedia messaging (MMS) as well as some with colour screens. Merrill Lynch predicts the appearance of a high-volume colour screen handset. Swedish news agency Direkt quoted a JP Morgan analyst on Friday saying he was not convinced about Sony Ericsson's concentration on niche markets with its new models announced this week. See Hot Handsets doing the Java jive "The new models look good but its volumes that count," said Jamie Wood. Chris Nuttall is a reporter for FT Investor in London