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Nokia sales surge, as do IP disputes with Qualcomm
By John Walko

EE Times
Apr 20, 2006


http://www.commsdesign.com/news/showArticle.jhtml?articleID=186500161

LONDON — Nokia reported earnings and sales above expectations for the first quarter of the year, lifted by strong demand for its products in emerging markets such as China.
Net profit rose 21 per cent to $1.29 billion in the first quarter compared with the previous year, exceeding market expectations.

Overall sales rose by 29 percent to $11.7 billion from $8.9 billion a year earlier, and sales of mobile phones grew 30 per cent.

Nokia said its share of the device market in the quarter was 35 per cent, up from 32 per cent in the same period a year earlier. The company sold 75.1 million phones during the period. The increase in market share was driven mainly by strong gains in China, North America, Latin America and the Asia-Pacific region, which offset market share declines in Europe and the Middle East and Africa.

Earlier Thursday (April 20) market research group Strategy Analytics said Nokia had a 33 percent market share of the global handsets market in the first quarter, but arch rival Motorola was the star performer with a 20 percent share for the first time since 1998.

Strategy Analytics said 225 million phones were shipped during the quarter, an annual growth rate of 31 per cent, and predicted sales of 1 billion units for 2006, up 22 percent from 817 million last year.

Nokia reiterated that the global mobile phones market was set for another year of good growth in 2006, with market volume expected to increase by 15 per cent or more. About 70 per cent of that volume growth was expected to come from emerging markets.

“We intend to maintain our leadership in these fast growing markets, where being competitive in the lower priced entry level products is critical to Nokia’s future success,” said Olli-Pekka Kallasvuo, Nokia’s president, who will replace Jorma Ollila as chief executive in June.

However, increased sales of lower-cost handsets in emerging markets have had a downward effect on the average selling price of Nokia’s handsets. The average price was Euros 103 in the first quarter, down from Euros 110 figure from a year earlier.

Last month, the Finnish company raised its estimate for the average selling price of its handsets to $125 in the first quarter. Separately, Nokia said on Thursday (April 20) that Qualcomm had filed a report on its licensing agreement with Nokia with the U.S. Securities and Exchange Commission. This escalates the on-going and increasingly acrimonious dispute between the companies on the use of CDMA patents held by Qualcomm.

Some of those CDMA-related patents are included in Nokia’s current license agreements with Qualcomm, which in part come to an end in April 2007.

Qualcomm’s filing said that it had been in discussions to conclude an extension or a new licence agreement with Nokia, but added that there was “no certainty” as to when terms might be agreed. “There is also a possibility that the parties will not be able to conclude a new or extended agreement by April, 2007.”

Nokia said it could not comment on the state of negotiations with Qualcomm to break the impasse because of “a non-disclosure agreement.”

Nokia and Qualcomm are involved in other legal disputes over patent infringement. In November, Qualcomm announced it was suing Nokia for infringement of a dozen of its patents. That move followed six leading communications industry companies filing separate complaints with the European Commission alleging that Qualcomm Inc. is unfairly withholding intellectual property.

Broadcom Corp. Ericsson, NEC, Nokia, Panasonic Mobile Communications and Texas Instruments Inc. each asked the EC to investigate and stop alleged anticompetitive conduct by San Diego-based Qualcomm in the licensing of essential patents for 3G mobile technology.