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Nokia Microsoft Gang Up On BlackBerry – US-FOREX.US

Forex-Publisher — Wed, 12 Aug 2009 16:46:41 +0000

In the technology world, the enemy of an enemy is a friend. So it goes with Nokia and Microsoft, which on Wednesday announced a “long-term alliance” to snatch more of the enterprise market from BlackBerry manufacturer Research In Motion-even though they also compete against one another with rival operating systems.Although the BlackBerry is not the only smartphone that has caused Nokia
and Microsoft
their fair share of headaches-as Steve Jobs can no doubt testify-Nokia executive Kai Oistamo bristled at the suggestion Wednesday’s announcement was truly about targeting the popular Apple
iPhone. “This is really about creating a formidable challenge for Research In Motion,” he said on a conference call to announce the partnership.The news failed to dent RIM
shares, up 1%, to 72.80, or Apple’s, up 1.8%, to 165.74, during midday trading in New York on Wednesday. Microsoft was up 2%, while Nokia rose 0.9%, in Helsinki.The first step of the alliance will involve creating a suite of Microsoft Office applications for Nokia handsets, beginning with Office Communicator Mobile, a client that combines instant messaging with Microsoft’s Exchange e-mail and calendar software. There is already an Office-compatible application for Nokia handsets, known as “Quickoffice,” but it lacks functionality compared with official Microsoft-developed apps.Quickoffice seemed to sense the writing was on the wall on Wednesday. The developer’s Web site offered visitors a 50% discount on all purchases-for one day only.From Nokia’s point of view, getting Microsoft on board will no doubt be a differentiator, especially for its BlackBerry-esque E-Series handsets. But will it be a game changer? Alandsbanken analyst Lars Soderfjell doesn’t think so. “I can probably count on the fingers of one hand the amount of times I’ve opened a Microsoft Word or Excel file on my mobile,” said Soderfjell, a user of Quickoffice.
CCS Insight analyst Geoff Blaber said it was an “incremental” development, but not a big draw for Nokia.The alliance is probably on balance better for Microsoft, which has failed to make much headway with its own Windows Mobile operating system. Although the software company’s head of Business, Stephen Elop, sought to scotch any claim it might be abandoning “WinMo,” Microsoft is clearly looking for ways to get a bigger share of mobile users. This is the third alliance in almost as many weeks for Microsoft, which announced the terms of a proposed tie-up with Yahoo!
last month, quickly followed by a five-year digital advertising partnership with Publicis Groupe of France and now Nokia.

Ericsson Now The Downturn Hurts – US-FOREX.US

Forex-Publisher — Fri, 24 Jul 2009 13:45:57 +0000

Back in January, LM Ericsson’s ebullient chief executive, Carl-Henric Svanberg, said that the impact of the economic slowdown-all too apparent for most households and investors-had yet to be felt at the network supplier. But he warned that it would be “unreasonable” to think this would last throughout 2009. And on Friday, when the company unveiled its second-quarter results, his prediction came true.
Ericsson
said that its quarterly profits had fallen 60% over the year, to 800 million Swedish kronor , largely down to restructuring charges and losses at joint ventures with Sony
and STMicroelectronics
. But the company’s core business of supplying and maintaining telecommunications networks was also affected: sales of networks were down over the year, excluding currency volatility, and Ericsson’s gross margin slipped to 36.3%, from 37%, excluding restructuring charges.The sales stagnation was not “alarming,” according to Lars Soderfjell, an analyst with Alandsbanken, but he said that it was part of a wider trend of slowing voice revenues for Ericsson’s operator customers. “Operators do not have to spend as much as in previous years on voice networks, on GSM [a widely-used mobile phone network standard],” he said, adding that incremental growth in voice traffic had turned negative for operators like China Mobile.Ericsson ‘B’ shares plunged 6.5%, to 72.50 Swedish kronor , during afternoon trading in Stockholm. The company’s network margins were particularly disappointing, according to Soderfjell, given that Ericsson had managed to significantly cut down losses from currency hedges. Ericsson’s Svanberg, who will become chairman of BP
next year, told Forbes that underlying industry trends in traffic and consumer demand were still strong, and that operator spending had only been limited by currency volatility. “When an operator sees his currency drop, he can only afford to buy less,” said Svanberg, referring to weakness from emerging-market operators.British network operator Vodafone
said on Friday that quarterly voice revenues, stripped of currency volatility and other effects, had fallen 5.6% over the year. Although Asia and the Middle East registered a gain of 10.7%, it was not enough to offset a 4.6% decline in Africa and Central Europe or a fall of 8.8% in the rest of Europe.

ST-Ericsson Aims At IPhone BlackBerry – US-FOREX.US

Forex-Publisher — Thu, 23 Jul 2009 12:45:57 +0000

When one of your biggest customers is the unprofitable handset maker Sony Ericsson, the success of Apple and Research In Motion-respectively behind the hugely successful iPhone and the ubiquitous BlackBerry-must be even more enticing. That’s why ST-Ericsson, the mobile chipmaker with significant exposure to Sony Ericsson, is stepping up its efforts to recruit America’s biggest mobile brands.In an interview with Forbes on Thursday, Alain Dutheil, chief executive of ST-Ericsson, said his company had to work harder to gain market share in the United States, citing “Apple
, RIM
, and, to a certain extent, Motorola
” as desired customers. The chipmaker currently has no American exposure, counting Sony Ericsson, Nokia
, LG
, Samsung and Sharp-all based in either Europe or Asia-among its clients.Dutheil admitted that Apple and Research In Motion were not particularly significant in terms of volumes: Their quarterly shipments are in the range of 5-7 million units, half Sony Ericsson’s and peanuts compared with Nokia’s. But they are hugely profitable, with mobile gross margins at around 40%, and their sales are growing despite the economic downturn. Nokia and Sony Ericsson, meanwhile, are seeing declines on all levels.ST-Ericsson, which is jointly-owned by STMicroelectronics
and Ericsson
, reported a 213 million net loss for the second quarter on Thursday, wider than its loss of 89 million for February and March. Dutheil blamed the complicated process of integrating assets from STMicro, Ericsson and also NXP, one of the seeds of the joint venture. He said that the third quarter would be more representative of the company’s operational profitability, as ST-Ericsson pushes through plans to cut 1,200 jobs to save costs.Unicredit analyst Guenther Hollfelder said that ST-Ericsson’s hopes for “more normal” business trends in the next quarter were “in line” with statements made by competitors. He recommended buying shares of STMicroelectronics on Thursday.The joint venture between STMicro and Ericsson was first announced last August, allowing the two to target customers like Nokia and Samsung. But the impressive strides of Apple have left Nokia looking slightly worse for wear in the high-end product segment, despite its dominant market position, and now ST-Ericsson wants to broaden its horizons.

Growing Pains For ST-Ericsson – US-FOREX.US

Forex-Publisher — Thu, 23 Jul 2009 11:45:56 +0000

Ericsson doesn’t seem to have much luck with joint ventures. Its handset-making partnership with Sony is struggling to turn a profit as consumers in Europe cut back on phone purchases, while its joint venture with STMicroelectronics-which makes chips designed for mobile handsets-reported a wider 213 million net loss for the second quarter than for the first quarter on Thursday, despite increased sales.It wasn’t all restructuring charges hurting the bottom line, either: ST-Ericsson’s operating loss, excluding one-off items, was also wider than in the first quarter, at 165 million. This is not an industry-wide phenomenon. American rival Texas Instruments
reported a return to operating profit for its wireless business in the second quarter on Monday. Qualcomm
did the same on Wednesday, turning in a second-quarter operating profit of 894 million, compared with a first-quarter operating loss of 10 million.Shares of STMicroelectronics
fell 2.7%, or 15 euro cents , to 5.37 euros , during midday trading in Paris on Thursday. Ericsson’s
‘B’ shares fell 0.9%, to 77.10 Swedish kronor , in Stockholm.So what’s going wrong? Part of the problem, according to Sal. Oppenheim analyst Nicolas von Stackelberg, lies with that other problematic joint venture, Sony Ericsson. He said that the handset maker’s “abysmal” performance in the second quarter weighed on ST-Ericsson, given that it is the chipmaker’s number one customer.”There are more losses to come,” said von Stackelberg.ST-Ericsson Chief Executive Alain Dutheil said in an interview with Forbes that Sony Ericsson was a “very important” client, along with Nokia
and Korean companies like LG. But he stressed that ST-Ericsson’s origins as a “three-way merger” weren’t helping profitability either. The company is made up of wireless assets from NXP, STMicroelectronics and Ericsson, which only adds to integration difficulties, and the firm is still in restructuring mode after announcing plans to cut a further 1,200 jobs in April.
Unicredit analyst Guenther Hollfelder took a positive view on the firm, saying that ST-Ericsson could still meet its breakeven target of mid-2010. He said the company’s confirmation that its restructuring plans were on schedule was “positive,” and rated STMicroelectronics “buy.”

Nokias Motorola Moment – US-FOREX.US

Forex-Publisher — Fri, 17 Jul 2009 11:46:06 +0000

The truth is being driven home to Nokia every quarter: being innovative is tough when you’re the biggest phone maker in the world.
The Finnish behemoth disappointed investors on Thursday after it lowered its outlook for the rest of the year, going back on previous forecasts to predict its market share for mobile devices would flat-line for the rest of 2009. Its quarterly revenues of 427 million euros also fell below expectations.
Though there was a slight improvement in operating margins, of 12.2%, this is still far off the 15-20% margins Nokia was boasting in 2008. The reason: Nokia is finding it harder to stay profitable because of the increasing competition in the high-end phone segment from the likes of Apple’s iPhone, the Palm Pre or even Toshiba’s TG01, against Nokia’s N97 and 5800, which are a key support to its margins.
“It’s probably the most claustrophobic quarter we’ve seen for new smart phone products being introduced,” said Geoff Blaber, an analyst with CCS Insight, who points out that Nokia “doesn’t have any really competitive products at the high end of the portfolio.”
That the traditionally dominant handset maker is under pressure from computer and software manufacturers just goes to show the big shift happening in the mobile sector, with consumers more interested in easy Web browsing and applications than the look and feel of their phone.
Unfortunately, Nokia appears to be on the back foot in keeping up with this shift, says Lee Simpson, an analyst at Jeffries and Co. “All these guys who have nothing to do with mobile are coming into this space with much better handsets than Nokia,” he said “There’s a big streak of Finnish caution running through this company and they have to throw this off.”
There was some hope at the start of Thursday’s management conference call following Nokia’s
second-quarter results, when executives talked up the company’s awareness of the big shift towards PC convergence. But Simpson laments that they were then short on details about how they would steer Nokia in a more innovative direction.
Simpson thus thinks this is Nokia’s “Motorola moment.” Once a giant of the handset world, Motorola
got stuck with its Razor handset model longer than it should have done, failing to catch on to other innovations that were taking place in handset making, before losing market share in China to Nokia and in the United States to Apple
.
Nokia seems to now be falling into the same trap. It was late to realizing the popularity of the clam-shell phone, late to touch screen and now late to the application store as pioneered by Apple’s iPhone, as well as the mobile operating system and high-quality Web browsing. “There’s nothing innovative about Nokia,” said Simpson. “It’s just a fast follower, and it always has been.” Right now Nokia still has the advantage of a flexible cost base and large-scale distribution channels in emerging markets like China and India, which will take time for competitors like Apple or Palm to replicate. But with consumers in the West already trending towards so-called smart phones, meaning the likes of the iPhone or Research in Motion’s
BlackBerry aren’t as “high end” as they used to be, Nokia can expect the same to happen, eventually, in emerging markets. It begs the question: what is Nokia to do in six years when iPhones are selling for around 30 a pop in China? In the middle of a paradigm shift, and with scant indication that Nokia has some high-end tricks up its sleeve, it’s no surprise that investors cut and run from the stock on Thursday, sending its shares down by nearly 15% percent at the close. They were still sliding, by 1.1%, on Friday morning, to trade at 9.37 euros .One certainty is that all eyes will be on the company’s Nokia World event on Sept. 2-3 in Stuttgart, Germany, where investors who are still holding on to the stock hope it will announce innovative new products. Many observers aren’t holding their breath.

Quiet Times For Vodafone – US-FOREX.US

Forex-Publisher — Tue, 14 Jul 2009 14:46:07 +0000

British network operator Vodafone seems to have “defensive” written all over it. The 100 billion company is the biggest mobile network operator in the world, it’s generating a healthy amount of cash and it actually raised its dividend payout last year. No doubt a great recipe for investors seeking shelter from uncertain times, but that doesn’t mean that Vodafone’s upcoming sales update will be anything to get excited about.Despite the network operator’s expansion abroad into emerging markets, Vodafone
is still heavily exposed to Europe, where economic pressures are still hurting consumers and where growth has stagnated. Worse, specific issues like a rise in Germany’s “termination rates”-or how much an operator pays for calls to another operator-and expected weakness in the troubled Spanish market added to investor caution on Tuesday, 10 days ahead of the update.Shares of Vodafone slipped 2.5%, or 2.90 pence , to 112.10 pence , during afternoon trading in London. Analysts at UBS cut their recommendation on the stock to “neutral,” from “buy,” earlier in the day, while Morgan Stanley analysts cut their price target to 170 pence , from 175 pence .UBS expects Vodafone to report a 5.5% sequential drop in sales for the June quarter, while Morgan Stanley expects a 4.7% fall.The UBS case is pretty bearish, arguing that Vodafone could soon represent a “classic value trap,” against a backdrop of deteriorating fundamentals and slowing earnings momentum. Analysts Laura Janssens and Nick Lyall said that Vodafone traded at a forward price-to-earnings ratio of 8.3, not a “stand out” figure relative to the sector, and recommended operators like Dutch rival KPN, Spain’s Telefonica
or Swisscom instead.Morgan Stanley’s analysts were more positive, arguing that cyclical factors could improve later this year, and that an inflection point could be close at hand. They said the market feared “the worst” from the upcoming sales update, but that the June quarter may mark the low point of the current decline, with “less negative” quarters still to come.
Vodafone shares have fallen 24.2% over the year, more than France Telecom
-down 18.2%-and KPN
, down 8.6%.

Fresh Start For Infineon – US-FOREX.US

Forex-Publisher — Fri, 10 Jul 2009 20:46:02 +0000

Germany’s Infineon has been through a lot since the start of the year. Its Qimonda subsidiary collapsed into bankruptcy in January, driven by a long-running slump in memory-chip prices, and company sales have taken a hit from the slowdown in industries such as mobile handsets and automobiles. But Friday’s announcement of a 1 billion rights issue-a move which had long been predicted by analysts-should be enough to help the chip maker start fresh.If the rights issue, which is backstopped by investment firm Apollo, is successful, Infineon will be able to tackle the burning issue of its debt pile. The company says it will use the 1 billion to pay back 570 million euros’ worth of convertible and exchangeable debt due next year. According to Guenther Hollfelder, an analyst with Unicredit, it could also use it to help repay the 203 million-euro bond maturing in 2014.”From this point of view, [if the rights issue is successful,] the company will be absolutely debt-free,” said Hollfelder, who recommended buying shares of Infineon on Friday.Shares of Infineon
ended the day up 5.4%, or 14 euro cents , at 2.72 euros , in Frankfurt. One analyst based in Frankfurt said that the announcement removed some of the “liquidity concerns” hanging over the stock, offsetting the dilution risks of the newly issued shares.The rights issue will price new shares at 2.15 euros each-an attractive entry point-and Apollo has promised to take on any shares left unsold. The investment firm has ruled out taking a stake in Infineon any larger than 30% minus one share, in order to avoid making a forced takeover bid, but this would only leave a tiny shortfall if shareholders did not take up their subscription rights.But even if Infineon takes care of its most pressing liabilities, will there be upside for the company in basic business terms? Hollfelder thinks so. He said that after going through a lengthy restructuring process, Infineon was currently performing at around break-even levels, and that future demand from high-end automakers like Daimler
or Bayerische Motoren Werke
would help the company’s beleaguered automotive unit.

Vodafones T-Mobile Play – US-FOREX.US

Forex-Publisher — Mon, 29 Jun 2009 15:46:14 +0000

Britain’s crowded mobile phone sector has been great for consumers, but terrible for the margins of its five big players. That’s why reports on Monday that Vodafone was exploring a bid to buy T-Mobile U.K., the British mobile network unit belonging to Deutsche Telekom, came as little surprise. Not only had Deutsche Telekom booked a 1.8 billion-euro write-down on T-Mobile U.K. in the first quarter, it has openly expressed an interest in reviewing the unit’s strategic operations. But that doesn’t mean Vodafone will bag T-Mobile U.K. on the cheap.
Deutsche Telekom
would be selling at the bottom if it were to do a deal with Vodafone now, said telecoms analyst Michael Kovacocy of Daiwa Institute of Research, Europe. The unit’s profit margin dropped below 15% in the last quarter, and “I doubt that they would want to use that as a basis for a deal.”
A more likely scenario: T-Mobile U.K. sticks around and tries to raise its profit margins by selling more contract deals to consumers, and hope the British economy improves in the meantime. “This pushes any potential deal out at least a few quarters,” said Kovacocy.
Yet Vodafone
won’t want to wait that long, and for a higher price tag on a company that is worth approximately 5 billion, with goodwill set near to 2 million, according to Cantor Fitzgerald global strategist Stephen Pope. The British mobile giant has been struggling, like its rivals in the U.K., in a highly dense field. Whereas most countries have three or four leading mobile phone networks, Britain has five: Telefonica’s
O2 being the largest; followed by Vodafone; France Telecom’s
Orange; T-Mobile and Hutchison Whampoa’s 3. Vodafone has also suffered from strong take-up of Apple’s
iPhone in the United Kingdom, which is only available under a contract with O2.Buying T-Mobile would help Vodafone capture a larger share of the retail market to rival O2, and although the company is in debt, new dividends from 45%-owned Verizon Wireless should help it pay that down in the near future. Many investors expect the Verizon
unit to start paying significant dividends its two parent companies from around 2012, said Tom Gidley-Kitchin, an analyst at brokerage firm Charles Stanley.
Gidley-Kitchin believes Vodafone’s reported interest in T-Mobile U.K. is illustrative of the strategy of its new, pragmatic chief executive, Vittorio Colao, who’s business plan is focused on cash flow more than strategic growth. “He’s said he’s not going to do transformational acquisitions,” said the analyst. Rather than the big strategic acquisitions made by predecessor Arun Sarin several years ago in emerging markets, Vodafone has recently done little more than increase its stake in a South African telecoms company and merge with Hutchison’s 3 Australia. With that in mind, if T-Mobile doesn’t work out, there’s always Hutchinson. Analysts think that company’s operator could also be the extra “fifth player” that gets bought out if T-Mobile manages to remain independent.