Handset giants lower forecasts as French minnow triples sales

10 Jun 2003

US handset manufacturer Motorola [NYSE: MOT] has lowered its forecasts for the second quarter due to a slowdown of sales in Asia. The company has attributed its weaker than expected performance in the Far East to the combined impact of the Severe Acute Respiratory Syndrome (SARS) outbreak and an increase in competition from local handset manufacturers. With sales in the US, Latin America and Europe still on track, Motorola has downgraded its quarterly sales target by USD400 million to between USD6 billion and USD6.2 billion.

Motorola’s announcement has led to speculation that its Finnish rival Nokia [NYSE: NOK] may follow suit and lower its own expectations. The manufacturer, which took 36.1% of the global handset market in 2002, will release a statement updating its forecast at noon today and is widely predicted to reduce its growth estimates to around 2.8%, from April’s prediction of between 4% and 12%. With control of 20% of the Chinese market, Nokia is unlikely to be as affected as Motorola by the Asian downturn but sales in its core European market have slowed and the weakness of the dollar is affecting its US revenues. There has already been some belt-tightening by the company with recent job cuts at its Networks unit and the company’s second quarter profit per share is likely to be down around three cents to 15 cents a share.

Contrastingly, French equipment maker Sagem, [Paris: SAGJ3] which had a minority 2% share of the global handset market in 2002, has reported impressive results for the first quarter of 2003 thanks to a near-200% increase in mobile phone sales. The company sold 1.1 million GSM and 2.2 million GPRS units in the period, compared to a combined 1.2 million units twelve months earlier. Sagem now claims over half of all colour-screen phone sales in its home market and expects to sell between ten and twelve million handsets in total this year, up from 7.8 million in 2002.

CIT estimates