Header Ads

Nokia seen strengthening lead position in Q2

LONDON, July 9 (Reuters) - Surging cellphone demand from emerging markets is expected by analysts to have cemented Nokia's (NOK1V.HE: Quote, Profile, Research) leading position in the April-June quarter, while third-placed Samsung (005930.KS: Quote, Profile, Research) is seen closing the gap on Motorola (MOT.N: Quote, Profile, Research).

This week will bring the season's first set of results from a handset maker when Sony-Ericsson (6758.T: Quote, Profile, Research) (ERICb.ST: Quote, Profile, Research) reports on Wednesday, giving some pointers about winners and losers in the crucial battle for the low end of the market.
With more than 5 million new clients signing up for mobile telephony each month in India alone, the world's leading cellphone makers are falling over each other to woo first-time buyers with low-priced handsets.

Nokia, which already dominates the market for lower-priced phones, is seen as the biggest gainer, selling around 100 million handsets in the quarter, more than double the amount of its closest rival.

Nokia raised its second-quarter forecast in May, saying it now expected to have increased its 36-percent market share.

Motorola, lacking the scale to compete with Nokia's aggressive pricing, is expected to have ceded more ground to Samsung, which is fast catching up.

Motorola swung to a loss in the first quarter as it tried to win more business in the lower end of the market.

"In growth markets, early indications are that Motorola has again struggled to maintain volumes as tactical pricing adjustments by Nokia have made some segments unviable," said CCS consultant Ben Wood.

"The pendulum is hastily swinging back toward Samsung," said Strategy Analytics analyst Neil Mawston.

"We expect Samsung to close the global market share gap on Motorola, from 4 percentage points to 2 points sequentially, but Motorola will keep its lead.

Gartner analyst Ann Liang said she would expect Samsung to catch up with Motorola in the middle of 2007.


IPHONE CHALLENGE

But not all customers in emerging markets are first-time buyers, with many now looking to buy more expensive phones such as Nokia's flagship N95.

The N95 comes with a GPS chip and a 5-megapixel camera, and retails for about 550 euros ($748) in Europe before subsidies and taxes. Nokia has hired extra staff in Europe to cope with good demand for higher-priced phones.

"We believe that the strength in Nokia's refreshed product line-up is not restricted to European markets," Deutsche Bank analyst Gareth Jenkins said in a note.

"We believe the company is also benefiting from strong sales of the N95 and 6300 in China and India."

JP Morgan expects the N95 model alone will contribute 210 million euros to Nokia's operating profit in the quarter, boosting earnings per share by 0.03 euros.

This would make more than 10 percent of Nokia's total profits in the quarter. Nokia is expected to report earnings per share of 0.28 euros and operating profit of 1.52 billion in the quarter, according to Reuters data.

Japanese-Swedish joint venture Sony Ericsson, the world's fourth-biggest cellphone maker, is expected to have increased its market share to 8.9 percent last quarter from 8.4 percent in the first quarter, according to a Reuters poll.

Sony Ericsson told Reuters in an interview last month it would leave the very low end of the market to its rivals, as it focuses on its popular Sony Walkman music phone and Cybershot camera phone brands.

The Walkman phones face a challenge in the quarters to come from Apple's (AAPL.O: Quote, Profile, Research) iPhone, which went on sale in the United States on June 29 and has a built-in iPod, Apple's best-selling portable music player.

No sales figures have been disclosed for the iPhone but some analysts have estimated sales of up to 700,000 handsets in its first weekend on the market.

source

No comments:

Powered by Blogger.