Nokia Abandons Plan to Develop Cell Phones With Sanyo

In one of the shortest lived joint-ventures on record, Bloomberg reports that Nokia (NOK) "abandoned plans to develop handsets with Sanyo Electric Co. for networks used in North America and Japan, saying spending on the technology probably won't pay off." According to the article, "Nokia also said it will cut development and production of handsets using code division multiple access technology, or CDMA."

The deal was announced in February. Thomas Langer at WestLB AG said, "The best-case scenario would have been that the venture would go well and Nokia would benefit from the profit. Instead, Nokia sees new subscribers in emerging markets adopting GSM."

Langer opined, "The move isn't perfect, but not as bad as it seemed at first glance. The world will go GSM and not CDMA."

Nicolas von Stackelberg at Sal. Oppenheim Jr said, "This is negative for Qualcomm,. It will undermine the CDMA market share further. CDMA will not win in emerging markets."

Strategy Analytics analyst Neil Mawston pointed out that "for the CDMA standard, Nokia ranked fourth globally behind LG Electronics, Samsung and Motorola (MOT) in the first quarter, while Sanyo was sixth behind Kyocera."

Hannu Rauhala at Opstock Securities said, "It's a quite good move actually. CDMA phones make up less thank 10 percent of Nokia's total volume and, according to my calculations, the profitability is lower on CDMA phones than on GSM phones."

According to Carolina Milanesi at Gartner, "unit sales at Nokia rose to 76.1 million in the first quarter from 55 million a year earlier,. Nokia is gaining in North America, where it's No. 2 behind Motorola, and lost market share in some markets in Asia because of aggressive price competition from Motorola and Samsung."

Jussi Hyoety at FIM Securities commented, "There were some high hopes when this was launched. Sanyo has had some problems as we know. It's annoying that this didn't work out."