Thank you Bochum!

The stardust is still being sprinkled at Nokia HQ, it seems. Q108 figures for the Finnish vendor were published yesterday and the firm amassed profits for the period of EUR1.2bn - that's a 25 per cent increase on the same period for 2007. Operating profit was up 39 per cent, while sales were EUR12.7bn.

April 18, 2008

8 Min Read
Thank you Bochum!

By The Informer

The stardust is still being sprinkled at Nokia HQ, it seems. Q108 figures for the Finnish vendor were published yesterday and the firm amassed profits for the period of EUR1.2bn – that’s a 25 per cent increase on the same period for 2007. Operating profit was up 39 per cent, while sales were EUR12.7bn.

The first reports out on the figures chided Nokia for missing analyst expectations, but the Informer is guessing nobody will be getting the boot for upping profits by ‘only’ 25 per cent. Unlike the people of Bochum, of course, the loss of whose jobs as Nokia moves handset manufacture from Germany to Romania is just the kind of capitalist inevitability that enables the Finn to boost its profits so vigorously.

Nokia’s share price shed eight per cent in reproach at the lower than expected profits, and also because Nokia ‘fessed up to the fact that it believes the mobile handset market will decline in value this year. This is bad news for other handset vendors, but Nokia plans to keep its income up simply by increasing its market share yet further. Which, let’s face it, it can probably do.

Anyway, in Q1, as always, the handset unit did the business, racking up an operating profit of EUR1.88bn and a fat 20 per cent margin. Lumbering along behind was Nokia Siemens Networks, patting its pockets distractedly and trying to find the EUR74m that it managed to lose. Also nibbling Nokia’s bottom line was EUR81m for the Bochum going away party, a few million that’s related to some pension issue or other and EUR100m worth of NSN restructuring.

Motorola’s done a bit of restructuring as well lately but it’s not going to be enough to fix the old place up, according to Nomura, at least. It’s all about new product, the investment bank said, without which “market share will continue to dwindle, leading to greater losses”.

Nomura reckons the US vendor’s Q1 results will “show that the rot has continued” and speculates about “significant infighting and non-compliance with orders from above” which it says has hamstrung Motorola in terms of new product launches. To top it off, the investment bank added the following ray of sunshine: “We think that another 5,000 [redundancies] might be planned and, if so, would expect these to be announced at the Q1 results.”

One place that Motorola could probably shift a few handsets is Cuba where, now that restrictions on private ownership of mobile phones have been lifted, the countries inhabitants have been thronging to outlets to get themselves a phone. Cuba has a mobile penetration of less than two per cent since, historically, only government officials have been allowed access to services.

They probably won’t be moving an awful lot of iPhones, given the size of wage packets in Cuba. The Apple gadgets are cheaper for Brits now, though, as distributors Carphone Warehouse and carrier partner O2 have both followed T-Mobile Germany’s lead and slashed the price of the handset. The 8GB version of the phone is now £169, dependent on the user shackling themselves to the 3G-less device for a whopping 18 months.

It could be that demand has tailed off now that the hype’s died down a bit, or it could be, as many believe both likely and necessary, that a 3G version of the unit is imminent, in which case consumers would be well advised just to wait it out.

Meanwhile, mobile VoIP player Fring this week claimed to have established itself as the first VoIP application to be made available on the iPhone. So users will be able to access Skype, AIM, MSN, Google Talk, ICQ, Twitter and the like using the handset’s wifi connection. The problem is that Fring only functions on hacked iPhones. But a full release is due later in the year, after Apple introduces Version 2.0 of the iPhone firmware.

Skype could be up for sale, as it happens, with online auction house eBay considering disposing of the internet telephony operation if it fails to find a better stratagem for integration of the businesses by year end.

John Donahoe, who assumed the role of chief executive officer of eBay at the end of March, said that the company is focusing on the synergies between Skype and its main business. But if those synergies aren’t regarded as strong enough, Skype’s position in the eBay portfolio would be reassessed.

eBay’s acquisition of Skype in 2005 is largely regarded as a $2.6bn blunder. An outlook given further weight after the auction house wrote down the value of the purchase by $1bn last year.

Throughout its lifecycle in the eBay portfolio, Skype has been referred to as a “great standalone business” and it is this ‘standalone’ reference that has irked eBay so much. eBay’s efforts to monetise Skype have largely fallen flat, and the unit’s main source of revenue remains user purchases of Skype-out minutes, allowing subscribers to call non-Skype numbers.

Nevertheless, Skype itself continues a strong growth curve. On Wednesday the operation announced $126m in revenue for the first quarter of 2008, representing 61 per cent year over year growth. The VoIP player added 33 million registered users in the quarter, ending the period with more than 309 million registered users around the world. Skype is even expected to turn a profit sometime this year.

Back to the handset world, where Microsoft has wrapped up its acquisition of Danger Inc, which created the Sidekick/Hiptop handset so beloved of Paris Hilton, and has slotted the firm into its new Premium Mobile Experiences team. As a name this has a vaguely “gentlemen’s entertainment” feel, doesn’t it, but that’s by the by really.

Now, when it comes to green issues the Informer is no Al Gore. But he likes to think he’s on message – and not just with a David Cameron green-wash either. Not only does the Informer ride his Penny-Farthing to work every day, he’s been reducing, reusing and recycling gags for years. This week he caught up with Ericsson’s director of corporate responsibility, Elaine Weidman. She was in town to promote the infrastructure firm’s new Corporate Responsibility Report.

Ericsson is not alone in ploughing the green furrow. Think back to February, and World Congress, when a bunch of infrastructure vendors were demonstrating base stations that were powered by bio-fuels, photovoltaic cells and hearty blasts of PR hot air. It struck the Informer as a trifle odd, because this is a collection of firms whose chief objective is to convince operators that the networks they have in place aren’t up to scratch and that they should replace them with shiny new ones immediately. And this doesn’t really fit in with the commonly held view of sustainable development.

Not surprisingly, Weidman disagreed with this standpoint. The upfront environmental costs of rolling out a network might be high, she said, but they’re dwarfed by the Sasquatchian carbon footprint that networks leave over the duration of their lifetime. And since the latest HSPA base stations are so much more efficient than their crumbly old gas guzzlin’ WCDMA counterparts, it makes sense, ecologically, to rip it up and start again. And if reusing lyrics from a song by 1970s ‘punk’ outfit Orange Juice isn’t environmentally sound, the Informer doesn’t know what is.

Looking to expand its footprint this week – geographical rather than carbon – was France Telecom, or Orange as it now wants to be known. Reports surfaced that the firm was sniffing around Nordic/Baltic player TeliaSonera and the reports were soon verified. French newspaper Le Figaro broke the story, with the FT quoting Orange finance director Gervais Pellissier for confirmation. Pellissier said that investigations were not too far advanced, and that TeliaSonera may prove ultimately to be the wrong target. He also name checked Norwegian incumbent Telenor.

The Norwegian player is still spending a fair amount of time in court, by the way, as this week a minor stakeholder in Russia’s Vimpelcom called Farimex slapped it with a suit worth $3.8bn, which is $3bn more than the value of the Fairmex’s stake, according to Telenor. The suit centres on Telenor preventing Vimplecom from buying a Ukranian operation, which Farimex says harmed the Russian player, in which Telenor holds a stake of just less than 30 per cent. All sounds a bit dodgy really – Telenor has an arduous time of it in that part of the world, although it doesn’t look to be running scared on this one.

Back to France, though and an Orange-TeliaSonera tie-up is by no means a no-brainer. TeliaSonera itself was created out of the merger of Swedish and Finnish incumbents and, while the firm has a reasonable international portfolio, there is not universal assent that this merger has proven entirely successful. France Telecom’s absorption of Orange, meanwhile, has hardly been a smooth ride, with widespread criticism that the Orange brand lost its glow beneath the gloomy shadow of an old Europe incumbent.

Then there are the governments. The Swedish and Finnish states still own 37 and 14 per cent respectively of TeliaSonera, while Nicolas Sarkozy still presides over 27 per cent of France Telecom, as well as his supermodel wife. Political issues could raise their slightly uglier heads. Either way, it looks like France Telecom has its eye on some further expansion going forward.

The Informer, meanwhile, has his eye on some lunch, so he will bid you good day.

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