Nokia, going down down down

nokiaOkay forgive me for massacring a fine song by Bruce Springsteen. Nokia is in such deep do-doo and there is no end of it. The company announced its second quarter results and well, how to put it politely – they were awful. of course you would see reports that say, profits up, sales down etc. That’s not the complete story. For instance operating margin is down to 13.7% from forecast 14.3%. Trust me that’s not good, because that’s the money you need. Handset volumes were off by 4 million from the forecast 49.2 million for the quarter.

And are unlikely to get any better. Just to give you a little perspective: Nokia estimates (not my or analyst numbers) that in the second quarter, the total market was around 148 million cellphones -up 48% YOY. This is even higher than 141 million the first quarter 2004, or 100 million in the second quarter of 2003. This is a great news for the industry, but not so good news for Nokia because others are sucking up the upside. Here is a perfect example: Sony Ericsson.

While Nokia stunk up the joint this morning, Sony Ericsson reported pretty decent results.  The company came in with earnings of €113M versus consensus of €97M.  Revenues for the quarter were €1.5B.  Handset shipments were strong, coming in at 10.4M versus 8.8M in 1Q04. On a day when NOK laid another egg, Sony Ericsson reported strong 2Q04 handset numbers.  Company also raised its expectations for industry handset shipments, which we believe bodes well for a strong 2004. (Loop Capital)

Now a little whole ago, I had posted this link. Tip of the hat to Loop Capital. They predicted a decline in Motorola market share, well that’s exactly what happened.Samsung, LG and El Cjeapo Chinese arg slowly and slowly grinding down the company. My Business 2.0 colleague Matt Maier in his excellent wireless report pointed out that even Moto is on a comeback with new handsets. Nokia, on the other hand is dicking around with badly designed phones, which despite a solid OS are well un-phone line.


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