Finland-based Nokia Corp. continued to put pressure on its competitors with mobile phone sales that
more than doubled for the fourth quarter, while its Swedish counterpart L.M. Ericsson saw its mobile phone sales fall 3
percent for the fourth quarter.
At the end of 1997, Nokia and Ericsson were on nearly equal footing in mobile phone
sales, each at about $5.5 billion. During 1998, however, Nokia’s sales jumped 74 percent to reach $9.5 billion while
Ericsson’s mobile phone sales increased only 7 percent to $5.8 billion. The year was a turnaround from 1997 when
Ericsson shined in the mobile phones sector with sales increasing 87 percent while Nokia’s mobile phone sales grew by
28 percent.
Ericsson, which has announced it will cut about 11 percent of its work force in addition to previous
streamlining efforts, blamed its lackluster performance in the mobile handset arena on severe pricing pressure and an
increasing consumer demand for entry-level phones for prepaid pricing schemes. The company noted volume increased
50 percent in terms of the number of phones sold, while prices fell about 30 percent.
Competitor Motorola Inc. said
its mobile phone sales were up significantly in Asia, higher in Europe and lower in the Americas. Analysts said the
company was helped by its introduction of StarTac Code Division Multiple Access and Time Division Multiple Access
handsets.
“Clearly Nokia had the best year of the top three mobile phone vendors,” said Matt Hoffman,
handset analyst at with Dataquest in San Jose, Calif. “We’re starting to see some rebound from Ericsson and
Motorola both.”
Hoffman noted the chances of any other mobile phone vendor cracking the top three is
unlikely, especially now that the one company that had the best shot at doing so-Philips Consumer Communications-
has been dismantled.
On the infrastructure side, Nokia and Ericsson both had sales growth in the double digits.
Northern Telecom Ltd., whose principal markets are Canada, the United States and Europe, had infrastructure sales
growth of about 8 percent for the year, and an 8-percent decline in sales for the fourth quarter.
Motorola said sales
for its Cellular Infrastructure Group were unchanged, with increased sales in Europe offset by lower sales in the
Americas and Asia.
Lucent Technology Inc.’s year-end results have not been made public.
Nokia
Nokia
Corp. said it believes it has become the world’s largest mobile phone manufacturer, following a year that exceeded its
targets for growth and produced the largest profits in its history.
Net sales grew 51 percent last year to $15.7 billion,
compared with net sales during 1997 of $10.4 billion. The company’s sales came 58 percent from Europe, 21 percent
from the Americas and 21 percent from Asia-Pacific.
The mobile phones segment chipped in more than half of the
company’s sales with $9.5 billion, a 74-percent increase from sales of $5.5 billion during 1997. Fourth-quarter net sales
in the mobile phone segment more than doubled from $1.49 billion in 1997, to $3.18 billion during the latest
quarter.
The company’s net profit grew 66 percent to $2.06 billion, or $3.48 per share, compared with profit of
$1.24 billion, or $2.10 per share, during 1997.
Ericsson
Ericsson’s fourth-quarter earnings report was
characterized by sales increases in all of its business segments except Mobile Phones and Terminals.
Sales in the
mobile phones segment fell 3 percent to $1.6 billion from nearly $1.7 billion during the fourth quarter of 1997. For the
year, net sales in the segment grew 7 percent to $5.8 billion from $5.5 billion during 1997.
Sales in the Mobile
Systems sector grew 22 percent during the quarter to $3.8 billion from $3.1 billion during the fourth quarter of 1997.
Sales for the year in the mobile systems segment grew 20 percent to $11.1 billion from $9.2 billion in 1997.
China
was Ericsson’s largest single market, with 12 percent of total sales, followed by the United States, the United Kingdom,
Brazil, Italy and Sweden. Sales in the Asia/Pacific region fell 3 percent despite growth in China, said the company.
Latin American sales increased 20 percent, Europe/Middle East/Africa sales increased 17 percent and sales in North
America declined 2 percent.
Ericsson said it expects income for the first six months of this year to be lower than the
first six months of 1998 because of financial uncertainty in certain markets, the cost of research and development of
new technologies and products, the fact that the launch of new mobile phones will impact earnings mostly during the
second half of the year and the initial costs for its restructuring plan, which is not expected to be offset by positive
effects until later this year.
Nortel
Including acquisition-related costs, one-time gains and charges, Northern
Telecom reported a net loss of $341 million, or 51 cents per share, for the fourth quarter, and $569 million, or 99 cents
per share, for the year.
Before costs, gains and charges, Northern Telecom reported revenues of $5.77 billion for the
fourth quarter 1998, an increase of 20 percent from the $4.81 billion reported at the same time the previous year. For
1998, the company reported revenues of $17.58 billion, compared with to $15.45 billion reported for 1997.
Nortel’s
wireless networks business segment contributed revenues of $3.74 billion in 1998, up 8 percent from revenues of
$3.454 billion during 1997. For the quarter, wireless network revenues were $1.01 billion, down 8 percent from
revenues of $1.09 billion during the corresponding quarter in 1997.
