Nokia Corporation (NOK)

[Eric]

The Koreans Check In: Samsung & LGE Results (Handsets)

• Samsung Slides here (Corrected URL):

http://tiny.cc/fhqnt

• LG Slides here:

http://www.lge.com/ir/news_ir/download/PRER|MENU_23185.jhtml

Both companies had very good quarters. Forex is very much in play. They have both been riding a tailwind because of the relatively weak Won. Both's guidance and the analysis of the Asian analysts that follow them, comment on the possibility of a strengthening of the Won against the Euro and USD which could alter their competetive advantage and change teir fortune somewhat.

Using Nokia's estimate of global sell-in temporarily and until Motorola reports, sales and share look like this ...

                   Q2'09 
                Units      Share  
               =======    ======= 
 Nokia          103.2m     38.5% 
 Samsung         52.3m     19.5% 
 LG              29.8m     11.1% 
 Sony Ericsson   13.8m      5.1% 
 Other           68.9m     25.7% 
               ======     ====== 
               268.0m     100.0%

I. Samsung Handsets

• Handset Shipments: 52.3 million units (QoQ +14%, YoY +14%)

• ASP: $124 : €88 (QoQ +2%+)

• Sales increase in both developed and emerging markets due to enhanced product lineup

· Europe/US: Strong sales of touch-phones and messaging-phones

· Emerging markets : Steady sales increase of strategic models

--> Slim design and differentiated functions (color screen, camera)

• Continued to outperform market growth

• Maintained double-digit OP margin, due to strong mid/high-end sales and cost saving despite increased marketing expenses.

--> Op margin was 10%, down from 11% in Q1

Samsung's Business Outlook (Industry):

• Q3 Industry Demand: QoQ +5% range increase

--> Developed market: Strong seasonal demand & Carrier promotion
--> Emerging market: Seasonal demand and expand 3G service in China

• Expect continued demand increase in smart-phone and touch-phone

• Expect 2009 handsets sales down ~10% YoY from ~1.2 billion to 1.1 billion units but see H1 at 47% v. H2 at 50% while split was 50%/50% in 2008

Samsung's Own Business Outlook:

• Handsets : Expect steady Margin/Sales (M/S) growth through strengthened product line-up

--> ’09 shipment target : 200 million plus units

--> Expansion of current strategic products in the global market & Launching of 2H flagship models (Jet, Galaxy, Star, Omnia II).

--> Growth expected in developed market (US, Europe) and emerging market where 3G service is expanding.

<II. LG Handsets:

• Shipments hit 29.8M units, up 32% QoQ. (8% growth YoY)

• Operating Margin up to 10.6% in Q2 from 3.9% in Q4'08 and 10.6% in Q1'09

• Launched new models: Arena, enVTouch/ enV3 to N. America, etc.

• Continued growth in emerging markets (China, MEA, CIS, etc)

• 30% M/S in Korea from upsurge in sales of Cookie, Lollipop, etc

• Profitability: Improvement was led by product mix centered on new model launches and solid growth from existing mid to high-tier models. Also, cost cutting activities improved profitability.

LGE's Business Outlook (Industry):

• Market: 7% growth QoQ or 280M units expected due to seasonality. (down 6% YoY)

LGE's Own Business Outlook:

• Steady growth and slight decline in profitability is anticipated QoQ due to marketing investment and expansion of low-tier models to emerging markets.

• New models: 4th Black Label Series, GD900 Crystal (transparent keypad), GM730 (smartphone)

• Double digit sales growth expected in India, China, CS America and CIS

• Strengthen competitiveness through efficient resource allocation and cost cutting activities ###

- Eric -