Takeaways from Nokia and Sony Ericsson’s Earning Releases

A pair of handset makers made their earning announcements recently. Nokia, the world’s largest mobile phone maker, announced results on Thursday. Although revenue dipped 5% from a year ago, handset unit shipments increased 5%. More importantly, Nokia assured the industry and investors by affirming its outlook for handset unit volume for the industry in 2008: 1.26 billion. Even though Europe and North American markets suffered weakened demand, Nokia’s executive sounded confident that the company’s presence in many emerging markets will help it to achieve its 4th quarter shipment goal. In a tough economic environment, such confirmation is definitely assuring. The following is just some interesting tidbits from the company’s conference call with financial analysts:

* Nokia shipped 1 million units of E71 in 3Q08
* N96 started shipping in September and did well in its first month
* Seven million GPS-enabled devices sold in the quarter, up over 50% from Q2, and the bundled navigation service was on over 70% of those phones (BTW, Nokia completed Navteq acquisition in the quarter)
* Introducing Come With Music subscription Service on selected Nokia phones, including the latest touch-screen 5800 phone. (Nokia clearly benefited from its 2006 acquisition of Loudeye, a wholesale music service provider based in the U.S.) Unique about this new service is the feature that consumers will be able to keep all the music they download even after they discontinue the subscription. This may be the trick to jumpstart the slow adoption of music subscription service.
* Acquisition of OZ Communications, indicating Nokia’s continuous efforts into the consumer email and instant messaging service market.

And this morning, Sony Ericsson also released its earnings of 3Q08. Total unit shipments increase 1.3 million from 2Q08 to 25.7 million units, but are flat on a year-over-year basis. Revenues for the quarter, however, slipped 10% compared with a year ago. It kind of echoed Nokia’ view of the industry growth by pegging annual unit shipment growth at 10% for 2008. Highlights of the quarter include the following:

* Shipped the first product from the Xperia family X1 at the end of 3Q08, expect good response from the end users.
* Will ship C905 in 4Q08
* Shipped 12 million Walkman phones in Q3 and year-to-date close to 90 million Walkman phones

Both companies emphasized that competition in the high-end smartphone segment has intensified quite a bit recently. Nokia, in particular, holds the view that mobile applications and services will be the differentiators that carrier partners will leverage to better compete in the subscriber market. Given the current turmoil in the financial world and its impact on consumer spending, both companies are very cautious about the outlook for next year.