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

To: foundation who wrote (32614)	2/19/2003 6:50:30 AM
From: foundation	Read Replies (1) \| Respond to of 196972

MOT Comments on Handsets, China Vendors, MSFT, and 3G Caution (Blank Headline Received) Wednesday February 19, 5:34 am ET By Lucas van Grinsven CANNES, France, Feb 19 (Reuters) - U.S.-based telecoms equipment group Motorola (NYSE:MOT - News) warned on Wednesday it was braced for another drop in handset prices, heavy competition in China and a slow take-off for third generation video phones. The group, which is struggling to regain ground and push up profit margins in the fiercely competitive mobile handset market, also said it expected Motorola to eventually team up with U.S. software giant Microsoft (NasdaqNM:MSFT - News), which has been trying to muscle into the handset industry. "In general, we're talking about another $4 to $5 of price erosion on average," Tom Lynch, chief of Motorola's handset division and the world's second largest behind Finland's Nokia (NOK1V.HE), told Reuters on the sidelines of 3GSM, the world's largest wireless communications trade show. Average selling prices are closely watched because they directly impact profitability in the handset market. Motorola's average selling prices, which are estimated by analysts to have declined by some $4 last year to $155, are under pressure as more low-end handsets are sold in emerging markets and components, such as chips, become cheaper. "You'll see a new level of low-end phones," he said, referring to a trend to cater for mobile phone users in developing countries with lower disposable incomes. Like its rivals, Motorola has felt the pressure of new and aggressive rivals in Asia, particularly in China, the largest mobile phone market with over 160 million subscribers. Lynch said he was confident Motorola could hold on to its number one position there, but acknowledged that local manufacturers, which have grabbed a percentage point market share every month over the last year, would continue to grow. "Over time the share of traditional suppliers will erode. It has started already. And we understand that we have to become nimbler," he said. MICROSOFT SOFTWARE Motorola last week launched the first handset based on Linux and java software and Lynch said this would be its preferred platform for a future generation of smarter phones, which will connect to email, play games and have other data applications. "Linux/java is our core, our flagship product, but we'll also do other ones," he said, adding he expects to use Microsoft software too. "And we don't do that grudgingly. We understand they're going to be a major player," he said. He declined to give further details. So far South Korea's Samsung Electronics (KSE:05930.KS - News), the world's No 3 cellphone maker, is the only top five handset producer to have launched a Microsoft phone. The top five jointly own British mobile phone software maker Symbian, seen as a bulwark against potential Microsoft attempts to gain a stranglehold on the handset industry as it has in the PC industry with its Windows operating system. 3G CAUTION Lynch was also cautious on investing too many resources in handsets for third generation, fast mobile networks, which have started off very disappointingly in Europe and Asia. "We have three 3G phones on our roadmap this year, and that's not going to change," he said, when asked whether Motorola would accept development subsidies from Japan's largest operator NTT DoCoMo (Tokyo:9437.T - News) to launch more 3G handsets. DoCoMo has signed up less than 300,000 subscribers in the first 16 months of its third generation service, which enables customers to make video calls. It has recently started subsidising handset development in Japan because cellphone makers were reluctant to invest in new handsets, and is understood to be in talks with Motorola too. "I don't think you're going to see anything for DoCoMo this year," Lynch said. "We're going to be very focused. The business model around 3G still has to evolve and it's going to be a tiny portion of our business in 2003," he said. biz.yahoo.com

To: foundation who wrote (32614)	2/20/2003 8:19:15 PM
From: Cooters	Respond to of 196972

Ben, I found this related article on Orange's equipment reviews from Euro WSJ. --- Europe's Mobile-Phone Firms Seek to Pare Equipment Costs By ALMAR LATOUR Staff Reporter of THE WALL STREET JOURNAL Mobile-phone operators in Europe are ratcheting up the pressure on suppliers to cut the costs of wireless-infrastructure equipment. Opening up what is likely to be a fierce bidding contest among the likes of Nokia Corp. and Telefon AB L.M. Ericsson, Orange PLC, one of Europe's major mobile-phone operators, said it will negotiate new contracts this summer for third-generation telecommunications infrastructure. That could result in Orange reducing its number of suppliers of such gear to two from three, said Didier Quillot, chief executive for the French arm of Orange. "Three is fine, but it could be two, and I don't think it will be four," he said. Orange's roster of telecom-infrastructure suppliers includes Alcatel SA, Ericsson and Nokia. Orange and other wireless operators are seeking to slash costs in the face of heavy debt, intense competition and uncertain demand for third-generation, or 3G, services, which offer high-speed transmission of video and audio clips as well as voice calls. Such retreats, along with the demise of two aspiring 3G operators in Germany, have put intense pressures on telecom-equipment makers, which were expecting 3G equipment orders to drive up their revenue for years to come. For example, Ericsson, the infrastructure market leader in terms of revenue, has reported losses for the past nine quarters, partly because of diminished demand for 3G equipment. KPN NV of the Netherlands has already negotiated down the total value of its 3G network equipment orders from roughly €6 billion ($6.45 billion) a year ago to an estimated €1.4 billion, partly by reducing the amount of equipment being ordered and partly by squeezing down prices. At least two other major European wireless operators are expecting adjustments of 3G telecom contracts in the near future, though they declined to be identified. "The demand for these services is not as big as vendors and operators predicted," says Romolo Pusceddu, a telecom analyst with IDC in Amsterdam. "It's safe to say there will be renegotiations of 3G contracts and even cancellations this year." Signed in 2000, Orange's three-year contracts with Alcatel, Nokia and Ericsson are due to expire in October. "We are looking to get the best deals," said an Orange spokeswoman. "We absolutely are reviewing the whole thing." An Ericsson spokesman said the company is continuing to bid for contracts with Orange. Alcatel declined to comment. A Nokia spokesman declined to comment on whether Nokia had realized the value it had put on the contract three years ago. Many of the 3G contracts that were signed in the past few years weren't very precise and have been hard to value as a result. Many feature a framework agreement establishing that equipment makers will deliver infrastructure for an initial pilot phase, but leave room for more precise orders and additional contracts for the actual network at a later point. Some contracts also contain clauses that allow wireless operators to change suppliers if deliveries don't arrive on time. European operators, including France Telecom SA, the parent company of Orange, have accumulated huge debts by investing billions of euros in purchasing 3G operating licenses and building networks in the hope that the technology would create new revenue streams. So far, there has been little evidence that consumers are eager for the fancy new services made possible by 3G. That has forced wireless operators to re-evaluate their business plans for 3G. Orange, under pressure from debt-laden France Telecom to cut costs, already announced two months ago that it will retreat from the 3G market in Sweden, where it couldn't afford to roll out a nationwide network as required by the operating license agreement it received from the country's telecom authorities. "There is a degree of uncertainty in the number of contracts we have with our suppliers," said Niklas Lilja, a spokesman for Hutchison 3G, which is known as 3 in Sweden. "We have not decided on every detail. We are deciding that as we go along." Hutchison 3G is majority-owned by Hong Kong's Hutchison Whampoa Ltd. Peter Erskine, chief executive officer of British operator MmO2 PLC, said it is becoming possible to win better deals from equipment suppliers, describing them as "very definitely hungry." Vodafone Group PLC, Europe's largest wireless operator by number of subscribers, negotiates global equipment purchasing deals that already render it significant discounts compared with the price paid by its rivals. The company, with a presence in 28 markets and more than 100 million subscribers, isn't expecting to renegotiate its 3G deals in the near future, people familiar with the situation said. A company spokesman declined to comment. -- David Pringle and Kevin J. Delaney contributed to this article. Write to Almar Latour at almar.latour@wsj.com Updated February 20, 2003