HOT TOPICS: Customer Experience Marketing Automation Social Business SharePoint 2013 Document Management Big Data Mobile DAM

Bad News in Mobile, S&P Cuts Nokia's Rating as Samsung and HTC Profits Flutter

Bad News in Mobile: S&P Cut Nokia's Rating, Samsung and HTC Profits Flutter

While the summer kicks in and the holidays stack up, the once vigorous mobile sector seems unable to take the heat. Looking more like a fading star as the under-performing results mount up and the market stagnates, leading to reductions in analyst expectations and credit ratings.

How Much Is Too Much? 

Consensus believes that the mobile market has plateaued at the higher end, with western markets saturated and in an placid upgrade cycle, emerging markets looking for middle-range phones and the magic at those over-hyped launches rapidly fading, relying more and more on gimmicks. 

To illustrate that, market leader Samsung still made a tidy profit in its latest earnings report, but not enough for the liking of those money-raking analysts. But don't cry too much for Samsung though, with operating income of around $8.3 billion in the last three months. Most of the analyst concern was over predictions of 76 million smartphone sales, 74 million, or 2 million less than expected, plus a weak TV market.

With Samsung continuing to roll out Galaxy models, and a new line of Tab tablets, perhaps the fault isn't with any smartphone maker's sales but in overly optimistic analyst expectations and a consumer base that is settling in to that upgrade path or moving on to other devices like tablets. 

HTC Feeling Nokia's Junk

If the leaders are suffering then for other Android players, life must be really tough. HTC, heavily reliant on its recent and heavily advertised One model, also underwhelmed analysts with an 80% drop in profit to around $41 million on $2.35 billion revenue. 

Alongside it, others in the mid-field are taking a battering. BlackBerry's recent results failed to flatter and now Standard & Poor's has downgraded Nokia to junk status, based on the company's move to buy-out Siemens' stake in the Nokia Siemens Networks venture. S&P's move is based on the belief that it would damage Nokia's finances and cash holdings, cutting its rating from a B+, perhaps also influenced by Microsoft's decision not to buy the company. 

Nokia has replied in its defence saying, "With a strong positive gross and net cash position, Nokia was able to take advantage of an opportunity to fully own Nokia Siemens Networks and, we believe, create meaningful value for Nokia shareholders. We will continue to prudently manage our cash resources post-transaction."

Apple in the Box Seats

All of this leaves Apple generating the highest margins and rumored to enter the mid-market with a colorful budget iPhone that could eat the lunch of Nokia, BlackBerry and some others in one sitting (die-hards aside). Has Apple timed its move to perfection as affordability becomes the key for future device sales? 

While Apple's stock may never threaten the highs of recent times, it at least can mortally wound its many rivals with this one move, while not slitting its own throat at the loyal high-end, despite the recent iPhone being rated as among the slowest models among its rivals.

For the others, are smartwatches really the way forward as the next big thing? Or will they be so tied to smartphones that users will stay within their current family. Certainly few seem to be rushing out to pick up Sony's, the only real contender among big-name brands. 

 
 
 
Useful article?
  Email It      

Tags: , , , , , , , , , , , , , , , , ,
 
 

Resources

 

Featured Events  View All Events | Add Your Event | feed Events RSS