Q2 Handset Game Update
All major OEMs have reported with the single exception of Nokia who reports next week. This is a Q2 update with Moto and LG plugged in. I've dropped my Q2 sell-in guesstimate by 3.1 million units to 268 million. Consensus estimates seem to vary between 260 million and 263 million units. What Nokia reports and what is credited to 'Others' will be the determinant. SA will publish their preliminary estimates next Thursday, August 2, immediately after Nokia publishes their earnings. Consensus estimates for Nokia are 99m to 101m units with some estimates running as high as 107 million.
Q2 2007 Handset Sell-In (Strategy Analytics & Q2 Vendor Reports to Date)
Global
Sell-In¹ 2005 Q1 '06 Q2 '06 Q3 '06 Q4 '06 2006 Q1 '07 Q2 '07
========= ====== ====== ====== ====== ====== ====== ====== ======
Nokia 264.9m 75.1m 78.4m 88.5m 105.5m 347.5m 91.1m Reports
32.4% 33.2% 33.5% 34.2% 35.7% 34.2% 36.9% 02-Aug
--------- ------ ------ ------ ------ ------ ------ ------ ------
Motorola 146.0m 46.1m 51.9m 53.7m 65.7m 217.4m 45.4m ~35.5m
17.9% 20.4% 22.2% 20.7% 22.2% 21.4% 18.4% ~13.2%
--------- ------ ------ ------ ------ ------ ------ ------ ------
Samsung 102.9m 29.0m 26.3m 30.7m 32.0m 118.0m 34.8m 37.4m²
12.6% 12.8% 11.2% 11.8% 10.8% 11.6% 14.1% ~14.0%
--------- ------ ------ ------ ------ ------ ------ ------ ------
SEricsson 51.1m 13.3m 15.7m 19.8m 26.0m 74.8m 21.8m 24.9m
6.3% 5.9% 6.7% 7.6% 8.8% 7.4% 8.8% ~9.3%
--------- ------ ------ ------ ------ ------ ------ ------ ------
LG 54.9m 15.6m 15.3m 16.5m 17.0m 64.4m 15.8m 19.1m
6.7% 6.9% 6.5% 6.4% 5.8% 6.3% 6.4% ~7.1%
--------- ------ ------ ------ ------ ------ ------ ------ ------
Others 197.2m 46.9m 46.4m 49.9m 49.4m 192.6m 38.1m
24.1% 20.7% 19.9% 19.3% 16.7% 19.0% 15.4% 02-Aug
========= ====== ====== ====== ====== ------ ------ ------ ------
Total 817.0m 225.7m 234.0m 259.0m 295.6m 1,014.7m 247.0m ~268.0m³
100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
========= ====== ====== ====== ====== ====== ------ ------ ------
Growth YoY +20.1% +29.6% +25.0% +22.4% +22.0% +24.7% <11.0% +14.5%
·
Recently Updated Totals 234.0m 259.0m 247.0m
from SA Updates Dated 08-10-06 11-14-06 05-17-07
·
¹ Updated Strategy Analytics for CY 2005/2006 and Q1'06 through Q1 '07
² Official by Vendors (Sony Ericsson and Samsung)
³ My revised preliminary global unit sell-in WA guesstimate
Key Handset Manufacturers Handset Metrics for Q1 2007¹
Nokia² Motorola Samsung SEricsson LG
=========== ========== ========== ========== ==========
Revenue (EUR) €8,161 Bil €4.061 Bil €3.491 Bil €2,925 Bil €1.726 Bil
Revenue (USD) $10,876 Bil $5.412 Bil $4.652 Bil $3,898 Bil $2.300 Bil
Units 91.1m 45.4m 34.8m 21.8m 15.8m
Sell-In Share³ 36.9% 18.4% 14.1% 8.8% 6.4%
ASP (EUR) €89 €89 €116 €134 €113
ASP (USD) $119 $119 $155 $179 $150
Op. Margin 16.2% -4.8% 13.0% 11.8% 6.6%
Op. Profit (EUR) €1.322 Bil Negative €0.485 Bil €0.346 Bil €0.114
Op. Profit (USD) $1.761 Bi ($0.260 Bil) $0.646 Bil $0.461 Bil $0.152
·
¹ Currency conversions at Q1 ending March 30, 2007 Interbank rate
² Nokia combines 3 division's handset sales: Mobile Phones, Multimedia, and
Enterprise Solutions (which is not all device revenue).
³ Based on Strategy Analytics May 10 estimate of 247m Q1 Sell-In
Key Handset Manufacturers Metrics for Q2 2007¹
Nokia² Motorola Samsung SEricsson LG
=========== ========== ========== ========== ==========
Revenue (KRW) --- --- w4.230 Bil --- w2,709 Bil
Revenue (EUR) ------ Bil €3,112 Bil €3.394 Bil €3,112 Bil €2.173 Bil
Revenue (USD) ------- Bil $4,189 Bil $4.569 Bil $4,189 Bil $2.926 Bil
Units ----- 35.5m 37.4m 24.9m 19.1m
Sell-In Share³ ----- ~13.3% ~13.8% ~9.2% ~7.1%
ASP (EUR) --- €89 €112 €125 €114
ASP (USD) ---- $120 $148 $168 $153
Op. Margin ----- (8.0%) 8.0% 10.1% 11.6%
Op. Profit (KRW) --- --- w0.350 Bil --- ---
Op. Profit (EUR) ------ Bil (€0.247 Bil) €0.281 Bil €0.315 Bil €0.281 Bil
Op. Profit (USD) ------ Bil ($0.332 Bil) $0.378 Bil $0.424 Bil $0.378 Bil
·
¹ Currency conversions at Q2 ending June 29, 2007 Interbank rate
² Nokia combines 3 division's handset sales: Mobile Phones, Multimedia, and
Enterprise Solutions (which is not all device revenue).
³ Based on Strategy Analytics May 10 estimate of 247m Q1 Sell-In
Q2 Summary Reporting Year to Date with Comparative Q1 and Q2 Key Metrics
LGE: Driven by their premium lineup of Chocolate, Titanium, and Prada all gaining traction with customers and a better balance of CDMA v. GSM/3GSM, LG had an excellent quarter in handsets. Far and away the best in recent memory, and probably their best ever overall, They had higher margins than Sony Ericsson and Samsung and I don't recall their handset margins ever being in double digits, much less being higher than Samsung's, or their total profit ever equaling Samsung's. Quite a comeback for a company who had 3 quarters of negative margins in 2005/2006. Perhaps Moto can do the same one of these quarters, but that's not likely in 2007. LG had a decrease in CDMA model shipments (but with improved ASPs) offset by a 52% shipment increase QoQ in GSM in Europe and substantial shipment growth the lower America’s, and a 47% shipment increase in WCDMA due to N. America and domestic Korean HSDPA sale.
Q1 2007 Q2 2007
LG¹ Growth/Decline
========== ========== ===================
Revenue (KRW) w2,354 Bil w2,709 Tri (+15.1% QoQ, +26.9% YoY)
Revenue (EUR) €1.726 Bil €2.173 Bil
Revenue (USD) $2.300 Bil $2.926 Bil
Units 15.8m 19.1m +20.9% QoQ, +124.8m YoY
Sell-In Share² 6.4% ~13.8% TBD, but probably flat to down
ASP (EUR) €113 €114
ASP (USD) $150 $153 +2% QoQ
Op. Margin 6.6% 11.6% -38% QoQ
Op. Profit (KRW) w0.110 Bil w0.313 Bil +185% QoQ, +198 YoY
Op. Profit (EUR) €0.114 €0.281 Bil
Op. Profit (USD) $0.152 Bil $0.378 Bil
·
¹ Currency conversions at Q1 & Q2 ending Interbank rates.
² Q1 based on Strategy Analytics May 10 estimate of 247m Sell-In. Q2 Estimated.
• LG Q2 Earnings Report and Presentation is accessible here ...
lge.com
Motorola: Reported consistent with their July 11 warning. Moto is a 'wickedly cold' unprecedented and unmitigated disaster in progress:
The company’s outlook for earnings per share from continuing operations in the third quarter is flat to slightly up compared to second quarter earnings from continuing operations excluding highlighted items. This outlook excludes any reorganization of business charges associated with the company’s operating expense reduction initiatives, as well as any other items of the variety highlighted by the company in its quarterly earnings releases. While the company does not expect the Mobile Devices business to be profitable for the full year, it does expect its financial results to improve in the second half of the year.
It appears that Moto's quarterly unit market share as well as their revenue share is the lowest in their history, and there is no indication of when they will return to profitability. They will probably regain 2nd place in unit share on a quarterly basis from Samsung this year or early next, but even that isn't a certainty. It is also not certain that they have yet bottomed. This is a real gift for Nokia. For others also, but Nokia who will probably set all time unit sell-in and sell-through highs, especially.
Q1 2007 Q2 2007
Motorola¹ Motorola¹
=========== ===========
Revenue (EUR) €4.061 Bil €3,112 Bil
Revenue (USD) $5.412 Bil $4,189 Bil (+29.2% QoQ, -40% YoY)
Units 45.4m 35.5m (-21.8% QoQ, -32% YoY)
Sell-In Share³ 18.4% ~13.3% TBD, but down ~5 ppt.
ASP (EUR) €89 €89 (-7% QoQ)
ASP (USD) $119 $120 (+1% QoQ)
Op. Margin -4.8% -8.0% (-14% QoQ, +13% YoY from 8.9%)
Op. Profit (EUR) €0.346 Bil €0.247 Bil
Op. Profit (USD) ($0.260 Bil) ($0.332 Bil) (-28% QoQ)
·
¹ Currency conversions at Q1 & Q2 ending Interbank rates.
² Q1 based on Strategy Analytics May 10 estimate of 247m Sell-In. Q2 Estimated.
• Motorola Q2 Earnings Release (PDF) here ...
tinyurl.com
• Motorola Q2 Financial Tables
motorola.com
Samsung: Reported 12-July (USA). Results were a mixed bag. Samsung apparently has knocked Motorola out of the #2 slot in unit share and revenue share this quarter, but it remains to be seen if they gained unit share QoQ, and how long they can retain the #2 slot as Motorola regroups. Unit sales increased QoQ by 2,6 million units (+8% QoQ) to a record high 37.4m units. but unit ASP was down $7 (-5% QoQ), revenue was down 1% QoQ, and margins (and profit) took a big hit (-41% QoQ, -13% YoY). Because of relatively poor and inconsistent performance since emid2004, accentuated by the Won strengthening against the Euro and especially the weak USD, the Telecoms unit management team has been overhauled and its leader, Dr. Steel projects very well. They are focusing more on EMEA and APAC than the Americas where vendors are decimated by operators because of the US distribution model and significantly disadvantaged by forex conversion because of the relative strength of a strong SK Won and pathetically weak US dollar, and on GSM/3GSM (>+75% of their unit sales) than CDMA2000 (still number 2 in CDMA2000 to LG and an important factor in their overall competitiveness) to strengthen unit share, revenue and profitability even as they tentatively stick their toe in the emerging market waters once again.
Q1 2007 Q2 2007
Samsung¹ Samsung¹ Growth/Decline
========== ========== ===================
Revenue (KRW) w4.280 Tri w4.230 Tri -1% QoQ, +5% YoY
Revenue (EUR) €3.491 Bil €3.394 Bil
Revenue (USD) $4.652 Bil $4.569 Bil
Units 34.8m 37.4m +8% QoQ, +49% YoY
Sell-In Share² 14.1% ~13.8% TBD, but probably flat to down
ASP (EUR) €116 €112 -3% QoQ
ASP (USD) $155 $148 -5% QoQ
Op. Margin 13.0% 8.0% -38% QoQ, -1% YoY from 9%
Op. Profit (KRW) w0.600 Tri w0.350 Tri -41% QoQ, -13% YoY from w0.410 Tri
Op. Profit (EUR) €0.485 Bil €0.281 Bil
Op. Profit (USD) $0.646 Bil $0.378 Bil
·
¹ Currency conversions at Q1 & Q2 ending Interbank rates.
² Q1 based on Strategy Analytics May 10 estimate of 247m Sell-In. Q2 Estimated.
• Samsung Q1 CC Slides here ...
sec.co.kr
Sony Ericsson: Reported 12-July (USA) and while Sony Ericsson fell somewhat short of market expectations they delivered a very good quarter — significantly better than Samsung's on most growth metrics. They remain solidly in the #4 slot for unit market share and growing revenue share. Like Samsung, ASP was down as they both moved their product range downstream to gain scale. Revenue was up and although operating margin and profit was down QoQ (up YoY) but their profit in Q2 exceeded Samsung's, putting them in the #2 slot behind Nokia, and they are the only other major handset manufacturer retaining double digit margins this quarter.
Q1 2007 Q2 2007
SEricsson¹ SEricsson¹
=========== ===========
Revenue (EUR) €2,925 Bil €3,112 Bil (+6.4% QoQ, +37% YoY)
Revenue (USD) $3,898 Bil $4,189 Bil
Units 21.8m 24.9m (+14.2% QoQ, +59% YoY)
Sell-In Share³ 8.8% ~9.2% TBD, but up
ASP (EUR) €134 €125 (-7% QoQ)
ASP (USD) $179 $168 (-6% QoQ)
Op. Margin 11.8% 10.1% (-14% QoQ, +13% YoY from 8.9%)
Op. Profit (EUR) €0.346 Bil €0.315 Bil (-9% QoQ, +55% YoY from €0.203 Bil)
Op. Profit (USD) $0.461 Bil $0.424 Bil
·
¹ Currency conversions at Q1 & Q2 ending Interbank rates.
² Q1 based on Strategy Analytics May 10 estimate of 247m Sell-In. Q2 Estimated.
• Sony Ericsson Q2 Earnings Release here ...
ericsson.com
• Sony Ericsson Q2 CC Slides here ...
media.corporate-ir.net
Significant Upcoming Earnings Reports for Wireless Sector Leaders
• 20-Jul Ericsson 2Q 07 results
• 23-Jul Texas Instruments 2007 results
• 25-Jul Qualcomm F3Q 07 results
• 25-Jul Apple F3Q 07 results
• 26-Jul ARM 2Q 07 results
• 02-Aug Nokia 2 Q07 results
Caveat
The usual applies. I may have inadvertently made typos, transposition errors, currency conversion errors, or calculation errors, in compiling table data in this post. If anyone spots one, please advise.
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- Eric (IC) - |
