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Technology Stocks : Ericsson overlook? -- Ignore unavailable to you. Want to Upgrade?

To: elmatador who wrote (5148)	3/24/2003 7:33:12 PM
From: REH	Respond to of 5390

Ericsson Revival Hands Nokia Another Challenge By Scott Moritz Senior Writer 03/24/2003 06:16 PM EST Recent reports about handset sales in Europe and signs of life from old rivals Ericsson (ERICY:Nasdaq ADR - news - commentary - research - analysis) and Motorola (MOT:NYSE - news - commentary - research - analysis) could signal some troubling trends for the top phone maker. Recent retail reports show encouraging signs for the batch of handsets from the Sony Ericsson joint venture. And evidence that penny-pinching telcos are unwilling to bear more of the cost of their customers' new phone purchases seems to be leaving some analysts with a dim view of European sales trends. Citing sales reports from the U.K.'s Carphone Warehouse, Lehman Brothers says the 2003 European handset market growth looks to be weaker than the recently lowered projections of 10%. One culprit, according to Lehman and the retailer's report, is the erosion of so-called phone subsidies or contributions a telco makes toward a customer's phone purchase. Fewer subsidies translate to phone price increases and dampening sales. The European handset market was expected to grow by as much as 13% this year after dropping some 20% last year. For handset king Nokia, that adds to the already worrisome news that demand for network equipment continues to decline. Nokia warned earlier this month that wireless infrastructure sales would drop about 20% below last year's levels. With the largest share of the handset market, Nokia has the most to lose if these trends continue. Last year, Nokia had 36% of the market, with 15% going to No. 2 Motorola and 10% held by Samsung. Former No. 3 Ericsson fell out of the money in 2001 when it joined forces with Sony (SNE:NYSE - news - commentary - research - analysis). After a dismal 2002 when the JV's handset sales fell 30%, the company has started to stabilize. One of the first out of the blocks with features like fancier ring tones, video messaging and camera readiness, the Sony Ericsson handsets were the top two sellers in Ericsson's homeland of Sweden in February. That suggests Sony Ericsson is building on the success it had late last year with its previous generation of phones.