Economic Downturn

Stability on the horizon, says Sony Ericsson, but still cuts 2000 jobs

Paul Rasmussen — Fri, 17 Apr 2009 12:42:33 -0400

Echoing similar statements to those from Nokia's CEO, the struggling handset vendor Sony Ericsson claims there are the first signs of stability in the market. However, the company said it was forced to cut its workforce by another 2,000 in an attempt to save money after a dramatic slump in Q1 global handset sales resulted in a net loss of €293 million.

The company's president, Dick Komiyama, said there were signs of consumer demand for cell phones stabilising in some markets such as the US and Europe. However, he admitted that in many regions demand was still weak, especially in Eastern Europe, Russia, the Middle East and India. "We are aligning our business to the new market reality with the aim of bringing the company back to profitability as quickly as possible," said Komiyama.

The company confirmed its cost saving programme would now be accelerated to reduce its operating expense by €400 million by the middle of next year. This would involve reducing its global headcount by approximately 2,000 people (around 2,000 jobs were cut last year), some 20 per cent of its workforce. This, together with last year's reductions, means Sony Ericsson has cut one-third of its global headcount.

The company confirmed it would not make a profit in 2009 and that it would focus on making higher-priced mobiles. "Despite the fluctuations in the economic downturn, we have full support from the parent companies," said Komiyama.

For more on this story:
Financial Times and The Times

Mobile money transfer to fall 50% by contraction in migrant workers

Paul Rasmussen — Wed, 04 Feb 2009 07:40:35 -0500

The contraction in migrant workers will impact the mobile money transfer market by 50 per cent by 2011, says a new market study from Juniper Research. The report claims that the rapidly changing economic downturn is forecast to have an immediate impact on the gross value of mobile money transfers, with the market in the worst case scenario reaching US$73 billion by 2011. This is some 50 per cent less than previously forecast, although strong growth overall is still expected in the long term, says Juniper. Article

Nokia reports sharp fall in Q4 sales and profits

Paul Rasmussen — Fri, 23 Jan 2009 12:00:36 -0500

After affecting Ericsson's results earlier this week, the economic downturn has now hit Nokia with the mobile phone giant reporting worse-than-expected fourth quarter sales and profits. The news impacted the Nokia share price which fell by 9 per cent on the Helsinki exchange. The Finnish vendor posted net profits of US$744 million for the three months to 31 Dec. 2008, down a staggering 69 per cent year-on-year, while sales slid 19 per cent to US$16.4 billion.

Nokia is forecasting handset sales will fall by 10 per cent in 2009, double what the company was estimating just a month ago. The overall device market shipped 305 million units in the fourth quarter of 2008, down 9 per cent year-on-year and down 2 per cent sequentially. Nokia's own mobile phone sales were down 15 per cent year-on-year at 113.1 million units and down 4 per cent sequentially. The company's market share in Q4 was 37 per cent, down from 40 per cent in the same quarter in 2007.

Nokia has identified smartphones as the key to growing its market share. Although Nokia currently has around 32 per cent of the smartphone market it believes its smartphone portfolio is heading in the right direction, citing the 5800 and N97 as examples. Nokia plans to focus on five core service areas: music, maps, media, messaging and games.

For more on this story:
- go to ITPro and Cellular News

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German mobile market bucks economic trend

Paul Rasmussen — Fri, 09 Jan 2009 12:43:36 -0500

Remarkably, given the severe economic downturn sweeping across Western Europe, the German mobile market continued to grow strongly during the third quarter of 2008 with annual net additions of 12.73 million, the highest figure for seven years. This was in marked contrast in the UK where the figures were considerably less favourable with the mobile market growing by only 4.4 per cent, the second lowest figure ever recorded. Annual net additions in the UK were just 3.15 million. In Germany Q3 was the fourth successive quarter in which annual growth exceeded 13 per cent, a result which has not been achieved since 2001. At the end of the quarter the German mobile market had 105 million connections representing a penetration rate of 127.5 per cent. Growth in the German market is being driven by significant price reductions by all four operators.

T-Mobile continued to lead the market with 38.8 million customers despite recording just 400,000 net additions. This is the second successive Q3 that T-Mobile has the lowest growth--apparently high churn was the cause of the problem. Second placed Vodafone had 36.19 million customers at the end of the quarter having picked up net additions of 900,000. E-Plus continued to lead the market in terms of proportionate growth with an annual gain of 20.7 per cent, compared to 14.9 per cent for O2, 12.6 per cent for T-Mobile and 11.2 per cent for Vodafone. This pushed E-Plus' market share to 15.2 per cent. The other player in the German market, O2, has the largest proportion of contract customers and the highest ARPU with a quarterly average of 17.30 euros a month.

For more:
- go to Cellular News

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3G props up falling mobile handset market

Paul Rasmussen — Fri, 09 Jan 2009 12:15:49 -0500

Global shipments of mobile handsets fell nearly 5 per cent year-on-year in the period October-November 2008, and with the ongoing economic downturn likely to continue the prospects for 2009 are not looking good. The main impact of the fall has been in the 2G sector which has declined significantly. The good news is that sales of 3G handsets are growing and will rise as a percentage of total sales from 39 per cent to 50 per cent over the next 12 months. ABI Research forecasts WCDMA handset sales will increase from 259 million in 2008 to 725 million in the current year. Smartphone sales are also forecast to increase their market share from 14 per cent in 2008 to 31 per cent in 2013.

The burgeoning mobile broadband market will drive sales of USB modems which will account for 80 per cent of the shipped volume. The cellular modem market overall will increase by more than 55 per cent in the coming year, driven largely by Asian suppliers introducing low-cost devices.

For more:
- go to 3g.co.uk and Mobile Europe

Related articles:
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Western Europe feels cold wind of downturn

Paul Rasmussen — Wed, 07 Jan 2009 12:28:43 -0500

The Western Europe mobile phone market stopped growing the third quarter of 2008 as consumer spending was hit by the economic downturn. Mobile voice revenues had already fallen by 1 per cent over the previous eighteen months but this figure increased to 3 per cent in the third quarter, according to a report from Strategy Analytics.

The good news was that mobile data revenues increased globally by 20 per cent in the third quarter and this has helped to maintain service revenues. However, says Phil Kendall, director of Strategy Analytics' Global Wireless Practice, comments "even these (mobile data revenues) could not save the European market last quarter from service revenue growth coming to an abrupt halt."

For more:
- go to Teleclick

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Credit crunch bites European mobile market

Paul Rasmussen — Wed, 03 Dec 2008 11:54:35 -0500

A new report from Ovum says Europe has become the first regional mobile market to be hit by the economic downturn. After analysing the Q3 2008 financial results of mobile operators around the world, Ovum concluded that, although other markets have so far proved resilient, Europe's top mobile operators show a marked, credit-crunch-induced deterioration in performance. The US mobile market has to date resisted the downturn and developing markets such as Latin America continue to enjoy double-digit revenue growth rates.

The good news is that Ovum does not anticipate a major slowdown for the mobile industry. Although some operators may become vulnerable, says Emeka Obiodu, a senior analyst at Ovum and the lead author of the report, the mobile market remains overwhelmingly buoyant and he expects it to ride out the current financial crises.

For more on this story go to Cellular News and Mobile Europe

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Economic problems impact mobile phone market

Paul Rasmussen — Wed, 26 Nov 2008 12:06:44 -0500

In the third quarter of 2008 the percentage growth in mobile phone sales worldwide declined to less than half that achieved in the same period in 2007. According to Gartner's latest mobile phone market analysis, total sales were 309 million units in Q3, a six per cent increase on Q3 2007. The global economic crisis is the main factor impacting on sales.

Market leading manufacturers Nokia and Samsung held up well under the impact of the global economic downturn although the former experienced lower replacement sales in mature and emerging markets. The main effects of the economic problems were felt in the battle for the world number three position currently raging between Sony Ericsson, LG and Motorola. The Gartner report says Sony Ericsson emerged as the winner in the third quarter largely because of the problems being experienced by its rivals.

Mobile phone sales in Western Europe were 43.5 million units in Q3, down from 47.2 million units in 2007. A slowdown in replacement sales adversely affected market performance in the region and will continue to do so in the fourth quarter says Gartner. In Eastern Europe, although a number of countries including Russia, Hungary, the Ukraine and Romania were badly affected by the financial crisis, this did not translate into a downturn in mobile phone sales.

For more on this story go to Telecomredux and Cellular News

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