The twists and turns continue in a year that most predict will be the biggest ever for the mobile-phone industry, as market leader Nokia Corp. disappointed with a flat second-quarter outlook, while No. 3 player Samsung Electronics Co. Ltd. checked in with a massive jump in first-quarter mobile-phone sales.
And though Nokia’s No. 1 market-share position will not soon be challenged, Samsung’s stellar first-quarter results put the company in direct competition with No. 2 player Motorola Inc. Indeed, as the industry continues to expand, some expect such market-share battles will only grow fiercer.
“We believe this serves as further proof that the industry remains healthy and the normal shifts between tier-one players will continue as it has for the last few years,” wrote Albert Lin of American Technology Research in a research note.
Investors moaned at Nokia’s morose second-quarter outlook of sales at or below the $8.4 billion it scored in the same quarter a year ago, sending the company’s stock down 8 percent to about $14.65 per share. The news comes after even more excessive stock declines following Nokia’s first-quarter sales warning earlier this month. The company said its first-quarter sales grew only 19 percent while the overall industry enjoyed growth of almost 30 percent. Nokia blamed its lackluster performance on a phone line-up light in mid-range devices but ponderous with low-end phones.
In its first quarter, Nokia reported net mobile-phone sales of about $5.1 billion, down 15 percent year on year despite a greater number of phones shipped. The company said sales were strong in Latin America and China, slower in the rest of Asia and North America, and flat in the Europe/Africa area. Nokia said it sold 44.7 million mobile phones in the first quarter, which represented a drop in its market share to 35 percent. However, Nokia said its phone sales in the second half of the year will improve with the release of new, as-yet-unannounced devices.
“Nokia reported an in-line quarter with a better sales and a lower margin outlook,” wrote Tim Long of Banc of America Securities in a research note. “Despite the lack of a catalyst, we believe the pullback represents a buying opportunity at this valuation.”
Nokia said its enterprise division was up on sales of the 6820 messaging device, while its multimedia division, which includes its N-Gage mobile-phone/video-game device, came in below expectations.
As a side note, Nokia last week released a new version of its wireless video game console called the N-Gage QD. The company said the updated release fixed two key flaws in the initial device-MMC card removal and what critics have dubbed “side talking.” Nokia also cut the cost of the new device down to $200 or $100 with a carrier subsidy. The company said the device would ship soon in Europe, and would hit U.S. store shelves in June.
Although investors largely scorned Nokia, the company still sells more than twice the phones of its nearest competitor. However, it’s unclear just which company will be Nokia’s nearest competitor in the first quarter.
Enjoying increasing sales throughout much of its business, Samsung said it shipped a staggering 20.1 million mobile phones-way up from the 15.5 million it sold in the fourth quarter. The numbers could put it directly alongside the industry’s No. 2 vendor Motorola, which sold 22.4 million mobile phones in the fourth quarter. Motorola will announce its first-quarter phone sales Tuesday.
Samsung said sales of its color-screen phones, camera phones and camcorder phones helped its mobile-phone business score the largest growth of all of the company’s divisions. The company’s phone business racked up $3.9 billion in revenues, up from the $3.1 billion it recorded in the fourth quarter. Samsung has said it expects to sell 65 million mobile phones this year, but might increase the number at the end of the second quarter, according to reports.
“Motorola’s turnaround is nearing completion, Sony Ericsson has returned to the market with attractive offerings; both Samsung and LG have compelling phones as well,” wrote AmTech Research’s Lin. “It has been a long time since all of the top-tier competitors were all strong as a group. It will make it harder for Nokia to maintain the market share gains it has made over the last two to three years.”
