Wednesday, October 19, 2005

Mobile Momentum Driving Motorola and Nokia Results

Strong global handset sales are propelling Motorola and Nokia's third quarter results. BusinessWeek reports that Motorola continued to ride the success of its Razr V3 handset to bigger profits. The company sold 6.5 million Razr's during the period and 12 million since its launch. To put it in better perspective, the Razr alone outsold ALL of Apple's iPod models in the third quarter.

In fact, sales of the Rokr music phone exceeded (low) expectations as well. 250,000 units of the phone were shipped to carriers in the first 30 days on the marketand sales were strongest in Europe. "It's a surprisingly large number," said Moors & Cabot analyst Matthew Hoffman.

Ed Snyder at Charter Equity Research said, "No doubt this is a company that lives and dies by cell phones. "Motorola has a strong suite of phones and a strong end market."

Reuters wrties that favorable market conditions should bring strong third-quarter results to Nokia when it announces its third quarter results on Thursday. The uptake in handset sales is being viewed as a positive "for the company's phone portfolio, as it adds top-end and mid-price models to its mainstay lower-cost line-up." This is especially important in the run up towards the critical holiday buying season.

Mark Davies-Jones at JP Morgan said, "There is strength in the high end as well as the low end; it's not just emerging markets driving the unit upside, which was the case earlier in the year. I still think that the market health is the bigger factor and means that numbers will still be very respectable from Nokia."

The global market share leader, Nokia claims it's share is increasing and margins as well. This will be helped by the introduction of new handsets. Richard Windsor at Nomura said, "That's positive, because what you also expect to see from Nokia would be an increase in gross margin in Q4, because they sell a greater proportion of new phones as opposed to old phones."