Nokia, Ericsson Face Off
Consensus estimates indicate that Espoo, Finland-based Nokia, which has maintained its position as the No. 1 maker of mobile phones in the world despite challenges from flashy new devices made by Motorola Inc. (NYSE: MOT) and Samsung Electronics Co. Ltd. (Korea: SEC), will report a 10 percent rise in third quarter earnings, with demand for high-end models and in emerging markets particularly strong.
Kista, Sweden-based Ericsson, meanwhile, which relies more heavily on its network-infrastructure division, should report net income up 18 percent, according to a poll of 42 analysts by Norwegian forecasting firm SME Direkt. Revenues from Sony Ericsson, the joint venture formed in 2001, are expected to make up a growing share of Ericsson's profits in the next two years, as growth in global handset sales continues to outpace forecasts.
Sony Ericsson ranks fourth in the global handset market, behind Nokia, Motorola, and Samsung.
Reporting yesterday, Motorola was the only one of the Big 4 to disappoint Wall Street: The Schaumburg, Ill.-based maker of the popular RAZR phone said its third quarter profit tumbled 45 percent, hampered, according to CEO Ed Zander, on lower-than-expected sales of wireless network equipment in Europe, Africa, and the Middle East, as well as slowing sales of the RAZR as users eye the expected launch of new dual-mode phones in the holiday season. Motorola shares, which had risen by almost a quarter of their value in the last year, have dropped almost 10 percent since Friday's close.
On Monday, Suwon, South Korea-based Samsung reported a 16 percent increase in third quarter profits, based on strong sales of its new line of high-end "Ultra Edition" phones. Samsung sold 30.7 million mobile phones in the quarter, a record for the company.
Overall the market for mobile phones continues to be surprisingly strong despite what many observers consider saturated markets in the U.S., Europe, and East Asia. Shipping 20 million handsets in the quarter, Sony Ericsson surged past LG Electronics Inc. (London: LGLD; Korea: 6657.KS) to take over fourth place in the world mobile phone competition, and like its rivals it cited strong performance in emerging markets as a positive contributor to rising volumes.
Driven by strong handset sales by the joint venture, Ericsson shares have risen 28 percent in the last three months. Sony Ericsson forecasts that global mobile phone sales will reach more than 950 million units this year, above previous estimates of around 900 million.
About 812.5 million cell phones shipped in 2005, according to research firm IHS iSuppli
— Richard Martin, Senior Editor, Unstrung