My comment..NEC shipped 3 Million WCDMA handsets to Hutchinson in the First Quarter 2004..
AWSJ(3/19) Hutchison Whampoa's 2003 Net Was Flat
(From THE ASIAN WALL STREET JOURNAL) By Evan Ramstad, Nisha Gopalan and Chan Ka Sing
HONG KONG -- Hutchison Whampoa Ltd. said its advanced cellphone service is finally taking off, grabbing 400,000 subscribers world-wide since January after missing sales goals in 2003.
In reporting flat net profit for 2003, Hutchison Whampoa's billionaire chairman, Li Ka-shing, said Thursday that the "worst period has gone" for its high-profile but unprofitable third-generation service. But executives said later that the company's so-called 3G losses will widen this year.
The Hong Kong-based conglomerate, with operations as varied as cargo shipping and cosmetics retailing, said net was HK$14.38 billion (US$1.85 billion) for 2003, marginally higher than the HK$14.36 billion it reported in 2002. Executives took numerous financial steps, including recording previously deferred profits from asset sales, to offset the 3G loss.
The company has attracted the attention of telecommunications executives world-wide as it takes the lead in building a 3G mobile-phone operation in several countries. Such phones offer high-speed Internet access as well as two-way video calls.
But the operation has been a drag on Hutchison's financial performance since its inception four years ago and it isn't expected to break even until the end of next year, Mr. Li said. Hutchison executives expect the business will lose more money this year than the HK$9.7 billion it did in 2003.
Operating earnings grew fastest last year in the company's retail and manufacturing businesses, which account for about one-third of Hutchison's sales. Earnings in the company's energy, property and ports businesses also grew solidly.
Cheung Kong Ltd., the real-estate firm controlled by Mr. Li that owns 49.97% of Hutchison, reported net of HK$9.82 billion, a 12% jump from 2002's HK$8.78 billion.
Excluding Hutchison, Cheung Kong's earnings rose 64% because of higher property sales and investment gains.
The 3G pain would have been worse for Hutchison if executives hadn't released gains that were set aside in 2000 when the company sold a portion of its 3G system in the U.K. to Japanese cellphone company NTT DoCoMo Inc. and Dutch telecommunications company KPN NV. Hutchison also recorded gains last year by selling shares in Vodafone Group PLC and Deutsche Telekom AG.
And this year, the 3G loss will be offset somewhat by the sale of the company's fixed-line phone service in Hong Kong. Executives also hope to sell the company's cellphone system in India.
During March of last year, Hutchison started 3G services in the U.K. and Italy and it signed up 520,000 customers by August. Then, technical problems halted shipments of new-phone models and the company finished the year with barely more than 600,000 customers, far short of its original target of one million each in the U.K. and Italy by the end of 2003.
During January of this year, NEC Corp. began shipping three million new handsets, and Motorola Inc. followed with a new model a few weeks later. In the time since, Hutchison said its subscriber base has grown to 1.04 million, including 361,000 in the U.K., 453,000 in Italy and 36,500 in Hong Kong.
That growth "just dispels any doubt that anybody ever had about 3G," said Frank Sixt, group finance director for Hutchison. The company also runs the service in Australia, Austria, Denmark and Sweden and is expected to launch later this year in Israel, Ireland and Norway.
Hutchison said it has spent about US$12.1 billion of US$14.8 billion in planned spending for 3G licenses, network construction and marketing. Executives last autumn said they might need to spend as much as US$1.6 billion more before reaching break-even during 2005, but Mr. Sixt said it now seems unlikely they would need to spend that much.
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