Second Quarter Earnings

Samsung ships 45.7M phones in 2Q

Sue Marek — Mon, 28 Jul 2008 12:29:59 -0400

Samsung, the No. 2 maker of cell phones, is feeling the pressure of the economic slowdown. The company reported second quarter earnings of $2.1 billion, up 51 percent over the same quarter a year ago but its cell phone division reported an operating profit margin of 12.8 percent, which is down from 15.5 percent in the first quarter. The company shipped 45.7 million units during the quarter, up from 37.4 million in the year ago quarter but slightly below the 46.3 million it shipped in the first quarter.

Samsung executives said that they expect the cell phone profits to remain under pressure and the company's year-on-year growth will likely slow in the second half of the year. Nevertheless, the company does expect to meet its target of shipping 200 million units in 2008.

For more:
- see this article (sub. req.)

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Services may be bright spot for Alca-Lu

Sue Marek — Mon, 28 Jul 2008 12:02:09 -0400

Look for Alcatel-Lucent's services business to be a shiny spot in the infrastructure vendor's second quarter earnings report tomorrow. The firm's services unit nearly doubled in size last year and now brings in about $5.02 billion in annual revenue. While most of Alcatel-Lucent's services business is from telecom operators, it's also branching out into other areas such as government agencies, transportation firms and security companies, which is helping it offset the slow growth that it's experiencing in the telecom sector. Article (sub. req.)

Motorola restructures--again

Sue Marek — Mon, 28 Jul 2008 11:47:26 -0400

Beleaguered telecom vendor Motorola has decided to separate its Home & Networks Mobility Group into three separate businesses, a move that many believe may make the businesses easier to sell off. The Home & Networks Mobility Group, which was created just a year ago as a combination of the firm's set-top box division and its connected home group, now is splitting into three units. The Broadband Home Solutions unit, which will include the cable set-top box business, will be headed by John Burke. The Cellular Networks group, which will make large-scale infrastructure equipment used by cellular operators, will be led by Fred Wright. And the Broadband Access Solutions group, which will make 4G technologies such as WiMAX, will be headed by Dan Moloney, who also oversees the entire division.

The Home & Networks Mobility Group has been profitable compared to the firm's mobile devices unit. Many analysts believe that either the entire division or parts of it are attractive to other industry vendors.

Motorola is scheduled to release its second quarter earnings Thursday. Avian Securities has forecast that the Home & Networks Mobility group will have a second quarter revenue of $2.6 billion, up 9 percent over the prior quarter.

For more:
- see this Chicago Tribune story

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Verizon adds 1.5M net customers in 2Q

Sue Marek — Mon, 28 Jul 2008 11:26:11 -0400

The gloomy economic outlook appears to have little impact on Verizon Wireless--at least not yet. The wireless carrier, which reported its second quarter earnings today, added 1.5 million net new customers in the quarter bringing its total customer base to 68.7 million. This was the same amount of net new customers as the firm added in the first quarter of the year. During the firm's conference call with investors this morning, COO Denny Strigl said the company does not expect significant economic impact on its financial results in the second half of the year. Here's a breakdown of other key metrics for the quarter:

Revenue: The company's wireless service revenues were $12.1 billion, up 11.8 percent year over year. Data revenue was $2.6 billion up from $2.3 billion in first quarter 2008.

ARPU: Average revenue per user was $51.53 for the quarter, up from $50.91 in first quarter 2008. Total data ARPU was $12.58 up from $11.72 in the prior quarter.

Churn: Churn was 1.12 percent, a record low for the company. Among postpaid customers churn was 0.83 percent.

Messaging: During the quarter, Verizon customers sent or received 70 billion text messages and 1.4 billion picture messages. In addition, customers completed 36.5 million music and video downloads.

Devices: About 40.5 million Verizon customers now have 3G broadband-capable devices.

iPhone 3G: Strigl says that the firm is only seeing minimal, short-term impact from AT&T's recent introduction of the iPhone 3G.

For more:
- see this press release
- see this report

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Sony Ericsson's 2Q profits sink, 2,000 workers cut

Sue Marek — Fri, 18 Jul 2008 11:35:34 -0400

Handset maker Sony Ericsson's second-quarter profits dropped a dramatic 97 percent causing the company to cut its workforce by 2,000 people. Second quarter profits were $9.5 million, down from $348.6 million in second-quarter 2007. In addition, net sales fell 9.4 percent to $4.46 billion down from $4.92 billion.

Sony Ericsson shipped 24.4 million phones in the quarter, down 2 percent from second-quarter 2007. The average selling price of its handsets was $183.72 down from $191.64. in the year-earlier quarter.

The news didn't come as a huge shock to investors because the company issued a warning in late June that slowing demand and shipping delays would hurt its second-quarter earnings. Sony Ericsson President Dick Komiyama said during a conference call on the earnings that the company is taking steps to become "a faster, more agile and more cost-efficient organization." That includes reducing its workforce by 2,000 people, which will save the company about $475 million.

For more:
- see this article

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Nokia's outlook for 2008 is good, market share is up

Sue Marek — Thu, 17 Jul 2008 12:01:40 -0400

Nokia surprised analysts this morning with better-than-expected second-quarter earnings. Although the company's profit was down ($1.75 billion compared to $4.49 billion a year earlier) most of that difference was because the 2007 results included a $2.98 billion gain from the formation of Nokia Siemens Networks. On the good news front, Nokia said that its global market share for handsets is at 40 percent, up from 38 percent a year ago. In addition, the company upgraded its forecast for the global handset market saying that mobile device volumes could grow more than its previous estimate of 10 percent in 2008.

On the negative side, Nokia's handset average selling price continues to drop because of higher volumes of cheaper phones being sold in emerging markets and the impact of the weak dollar. Nokia's ASP was $117, down from $125 in the first quarter and down from $143 in the same quarter a year ago. The company also said it had lost some share of the smartphone market in the second quarter, but said it was due to a lack of smartphones in its portfolio. Nokia executives said that will improve in the second half of the year because the company plans to introduce 10 new smartphones.

In the U.S. market, where Nokia has been weak, the firm saw some improvement thanks to two handsets, one that is offered by T-Mobile USA and another by AT&T. Nokia executives expect this to improve even more as the company has had its first CDMA handset approved by Verizon Wireless for use on its network.

Nokia Siemens Networks meanwhile continues to focus on lowering expenses and improving margins. Nokia executives said that the market is difficult because of competition but that management is focusing on being profitable rather than attaining market share. The joint venture finished a quarter with surprisingly strong revenue growth of 18 percent to $6.45 billion over the second quarter of 2007, which was the first reporting quarter for the company.

For more:
- see this press release

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