The handset market enjoyed another solid quarter, with Motorola Inc., Samsung Electronics Co. Ltd. and Sony Ericsson Mobile Communications L.P. giving thanks for a rosy holiday shopping season.
“We expect a robust 4Q handset market to benefit both Motorola and Nokia,” wrote Ittai Kidron with CIBC World Markets. The firm does business with a variety of wireless players.
First up in the earnings season is Motorola, which reported a smashing fourth quarter with $1.2 billion in net earnings and a record 44.7 million phones shipped. However, the results were slightly below analyst expectations, which prompted investors to send the company’s stock down more than 6 percent after the news.
Motorola’s profits were largely due to the company’s handset successes. Indeed, Motorola said it now commands 19 percent of the mobile-phone market, which solidifies its position as the No. 2 worldwide handset vendor behind Nokia Corp. Nokia is scheduled to post fourth-quarter results Thursday.
“We are very pleased about our record fourth-quarter and full-year results,” said Ed Zander, the company’s chairman and chief executive officer.
“Motorola continues to deliver compelling products and solutions to our customers, who are embracing our vision of seamless mobility.”
In Motorola’s handset business, the company recorded $6.5 billion in sales, up 30 percent compared with the year-ago quarter. The company reported operating earnings of $663 million, up from the company’s $532 million in the same quarter a year ago. Motorola said it retained its No. 1 market-share position in North America, and scored the No. 2 market-share position in Europe.
In its Networks business, Motorola said its sales dropped 4 percent to $1.5 billion. The division’s operating earnings totaled $225 million, compared with $275 million in the year-ago quarter.
For the first quarter, Motorola predicted between $9.3 billion and $9.5 billion in sales.
Although Motorola boasted of its cash position and profitability, analysts worried that the company now has nowhere to go but down.
“In short, we think Motorola is nearing the end of what has been a long and strong run, and earnings momentum will likely slow from here,” wrote Brantley Thompson with Goldman Sachs. The firm trades in Motorola securities.
Meantime, Sony Ericsson Mobile Communications L.P. sat in a similar position. The company reported solid fourth-quarter results, but analysts predicted Sony Ericsson would have a sluggish 2006.
“Our thesis on Sony Ericsson has not changed; we expect it will maintain its share flat in 2006,” wrote Kidron with CIBC. The firm makes a market in the securities of L.M. Ericsson, parent to Sony Ericsson.
In its fourth quarter, Sony Ericsson announced a dramatic increase in net income as well as a boost in its shipment numbers, results the company in part attributed to the success of its Walkman-branded music phones.
Sony Ericsson posted sales of $2.8 billion, a year-on-year increase of 15 percent. The company’s net income rose from $66.4 million in the fourth quarter of 2004 to $173.9 million in the fourth quarter of last year. The company shipped 16.1 million phones, up 28 percent from the year-ago quarter.
Interestingly, Sony Ericsson said it paid $16.9 million for a 64.5-percent stake in Beijing Suohong Electronics Co. Ltd. Sony Ericsson said the move would strengthen its in-house manufacturing processes.
While the world’s top phone makers jostled for position in the race into the first quarter, BenQ Mobile used the occasion to remind industry watchers that it is not to be forgotten.
The company unveiled its new consumer mobile-phone brand-BenQ-Siemens-an announcement that coincided with the release of the company’s first phones carrying the new logo.
Taiwanese electronics manufacturer BenQ Corp. last year acquired the struggling mobile-phone division of German industrial giant Siemens AG, thereby creating its BenQ Mobile division. BenQ Mobile is by most accounts the world’s sixth-largest mobile-phone maker. Although the company has been relatively quiet during the past few months, its new branding announcement is evidence BenQ Mobile hopes to remain in the world’s phone spotlight.
“We have now successfully united the two companies at an operation level and today marks the start of the next phase in our development-to engage consumers worldwide with the spirit and energy of our combined BenQ-Siemens brand,” said Jerry Wang, executive vice president and chief marketing officer of BenQ Corp. “I believe we have the focus, resources and passion to invigorate the market in 2006, especially in 3G, and that our strategy will lead to a sustainable and successful handset business that commands a significant share of the market.”
To mark its new logo, BenQ Mobile unveiled its first three phones to carry the BenQ-Siemens brand. The company did not say where it would sell the devices or how much they would cost. The company’s new EF81, S68 and S88 phones offer a range of features including Bluetooth, digital cameras and-in the case of the EF81-support for W-CDMA technology.
Indeed, BenQ Mobile promised that fully one-third of its products this year would support 3G networks. The company also said that three-fourths of its phones this year would feature a music player or FM radio, and half would include at minimum a 1.3 megapixel camera.
