The numbers game

Against the backdrop of the Eurozone debt crisis, it seems a good week to be talking about financial performance. And as always there are winners and losers in the numbers game. The Chinese may be reluctant to help the Greeks out of their hole, but has anyone thought about asking Qualcomm?

November 4, 2011

7 Min Read
The numbers game

By The Informer

Against the backdrop of the Eurozone debt crisis, it seems a good week to be talking about financial performance. And as always there are winners and losers in the numbers game. The Chinese may be reluctant to help the Greeks out of their hole, but has anyone thought about asking Qualcomm?

The Californian silicon and IP player saw revenues for the final quarter of its fiscal year up by 39 per cent year on year to $4.12bn, with profits up 22 per cent to $1.06bn. Profit for the full year hit $4.26bn on revenues of $14.96bn, an improvement over the previous year of 31 per cent.

Head honcho Paul Jacobs credited the growth in demand for smartphones as well as the strength of the firm’s legendary patent portfolio for the performance, predicting further growth of up to 27 per cent for the upcoming year. Revenues should hit between $18bn and $19bn, he said.

The firm clearly doesn’t expect any negative impact from the news that Nokia has offered a lifeline to ST-Ericsson, announcing that it’s planning to use the chip player’s NovaThor platform in Windows-based smartphones at some stage in the future. But Ovum analyst Nick Dillon poured cold water on the announcement, pointing out that WP7 doesn’t support dual-core chipsets like the NovaThor, with Microsoft having announced no plans to change this state of affairs.

Nonetheless, Dillon said that in time the deal would prove to be a “huge win” for ST Ericsson, especially if Nokia is looking in time to end its reliance on Qualcomm silicon altogether.

Meanwhile profits were declining at Indian and pan-African operator Bharti Airtel. Profits for fiscal Q2 were down by 38 per cent to $225m, the carrier said, partly due to currency fluctuations and the strength of the US dollar against currencies in the African markets where it operates. Zain, which sold Bharti all of those African properties, has been enjoying slightly more positive times, with a seven per cent increase in profit for the first nine months of 2011, hitting $762.5m.

Perhaps the Zain African portfolio is a bit like the video tape in cult Japanese horror flick The Ring. So long as you can pass the curse to somebody else, you’ll survive.

The same cannot be said for WiMAX, largely because nobody else seems to want to take it on. Israeli player Alvarion, which has carried the WiMAX can for what seems like more than its fair share of the relay, had more bad news this week, with the announcement that Q3 revenues were down year on year to $47m, with losses increasing to $7.5m from $6.1m a year ago.

Alvarion decided to console itself with the acquisition of a company with a vaguely similar name. Fellow Israeli outfit Wavion, develops wifi applications, and became part of the Alvarion stable for $30m in cash.

On the handset side of the fence, Motorola Mobility, which Google recently snapped up for an eye-watering $12.5bn, last week reported a shrinking net loss, but this week revealed plans to lay off around 800 workers, costing around $34m in related costs.

European and Latin American carrier Telefónica is doing some slashing of its own in a bid to keep future costs down. Matthew Key, former head of Telefónica Europe and current head of the newly formed digital unit, said the operator currently offers more than 240 handsets worldwide, of which just 12 are common in every market, but aims to cut that number down to less than 100. The move comes as part of a wider efficiency drive, and aims to allow the operator enhanced freedom to develop new products and services within its digital division.

The Informer recently saw Key talking about a “mindset shift” that would come about as a result of the creation of Telefónica Digital, during which he said: “The biggest factor in this mindset shift is that we have to move into the future and not protect the past. We can’t operate in a walled garden, we need to create the right products for people.”

With one eye on the future Korean vendor Pantech will be launching its Vega handset in South Korea this month, utilising gesture recognition technology provided by Israeli firm eyeSight. The device will enable users to answer incoming calls, activate their MP3 players, play games, and perform other tasks using simple hand gestures and without actually touching the screen.

Meanwhile, Samsung has confirmed that it will be launching a smartphone with a flexible screen in 2012. The firm has been showcasing its flexible Super-AMOLED displays since last year and company spokesman Robert Yi confirmed in an earnings call that products utilising the technology will be on sale next year.

There was more future gazing from Square, the payments startup founded by Jack Dorsey of Twitter fame, which is working on a ‘pay by face’ functionality for its platform. The system knows which store you are in from the location of your phone, delivers your photo to the shopkeeper and allows him to verify you by confirming you are the person in the photo. Transaction complete.

Visa Europe meanwhile, has invested £24.7m in mobile payments platform Monitise, giving the latter a greater European presence through an 8.8 per cent holding in the firm. Visa Europe president and chief executive Peter Ayliffe, will join Monitise’s board of directors, and said that that the growth of mobile phone services and e-commerce, together with the evolution of the mobile handset into the smartphone, present two of the most significant opportunities for the payments technology industry.

In September, Visa Europe announced the launch of Visa Mobile Person-to-Person payments and Visa Alerts, two services designed to help consumers manage their money and make payments using their mobile phones. Monitise was involved in both initiatives.

Rounding up now and something the Informer’s long suspected – 97 per cent of all the traffic travelling through the network of mobile operator 3UK today is data. The carrier said that in the 14 months between June 2010 and September 201, it has seen a 427 per cent increase in data usage for smartphone customers. Phil Sheppard, director of network strategy at 3UK, said that the operator’s focus has primarily been on users’ online experience and that its 3G network was made for the mobile internet.

Perhaps pushing a solution to the “too much data on the network” problem, Nokia has teamed up with wifi network operator Spectrum Interactive and location based media firm Selective Media, to trial a free wifi offering on the streets of London.

The trial project, which runs until the end of 2011, takes advantage of 26 London hot spot locations from Spectrum Interactive’s portfolio of real estate, most of which will be based on payphone boxes. It’s intended to assess both the demand for free wifi access and the browsing behaviour of consumers using the service across the British capital. The hotspots are typically fed by a 20Mbps DSL backhaul link, while individual users will allowed a 1Mbps connection in order to keep bandwidth hogging down.

Usage will be unrestricted across devices, browsers and apps, with users confirming a terms and conditions check box before access is granted. Following a successful trial, Nokia said plans are in place for a large-scale rollout across London from early 2012.

The question remains as to how this initiative is monetised, which is where Chris Bull, founder of Selective Media, comes in, saying that mobile advertising is on the agenda. Presumably the reason for allowing open access to start with would allow Selective to build up an idea of who is using the service and what they’re using it for. The firm would then be able to use its ad network to serve appropriate ads to popular sites.

That’s about the size of it for this week

Take care

The Informer

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