Qualcomm Inc (QCOM)

[IronAir]

"Nokia says it's the #1 3G phone seller ... despite being late to the game ... 3G a real bright spot for Q3 ... and should also benefit Q4" (paraphrase of text highlighted below)

A leading question for all; how much $ does Qualcomm make off of Nok's 2G phones? __$0__ .... but 3G .... $?!!!
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Nokia Reports Big Sales Gains, But Price War Worries Investors

~ http://biz.yahoo.com/ibd/051020/tech.html?.v=1 | Mike Angell | Investor's Business Daily | 2005'10'20'est19:00 --

Nokia posted third-quarter results Thursday that met analyst expectations. But its fourth-quarter outlook disappointed some, sending shares tumbling.

The world's biggest phone maker said the market for cell phones continues to thrive in rich and poor countries. In developing areas, many customers are buying their first phones.

Shoppers in developed countries are upgrading -- buying more exotic models with music and high-speed, third-generation cellular features.

All that is helping Nokia, which last year struggled with market share losses, win back customers. But its focus on emerging markets -- with lower selling prices -- could pinch the company's future earnings.

"Phones in developing markets will be more competitively priced, therefore Nokia might not expect the same level of margins as it did in the past," said Lawrence Harris, analyst at Oppenheimer & Co.

Nokia's total sales increased 18% over a year ago to $10 billion. Earnings rose 41% to 24 cents a share.

Excluding one-time gains for selling a radio business, real estate and investments, earnings were 22 cents a share. That was in line with analyst estimates.

Back in September, Nokia forecast third-quarter sales of $10 billion to $10.2 billion and earnings between 24 cents and 25 cents a share -- including items.

Some investors had hoped Nokia "would at least hit the midpoint of that range," said Moors & Cabot analyst Matthew Hoffman.

Since the actual results came in at the low end, they may have been seen as disappointing. Nokia's shares fell 7% Thursday to 15.90.

Nokia's third-quarter cell phone sales rose 15% to $6.2 billion vs. a year ago. But the unit's operating profit was up only 4% to $1 billion.

The weaker growth of profit relative to sales shows how competitive the cell phone market remains. Manufacturers are slashing prices to lure buyers.

Nokia's emphasis on developing markets sent the average selling price of its phones down to $122, from $125 in the second quarter. Nokia expects prices to fall again in the fourth quarter, reflecting growing sales in developing countries.

The company's sales to Asia grew the fastest in the third quarter, followed by Europe. Nokia continues to lag in the Americas, where its market share slipped last quarter.

Nokia shipped 66.6 million phones during the third quarter. With nearly 200 million phones sold overall, Nokia remains in the industry's top spot. It has a 33% share of the global phone business.

In terms of unit phone sales, Nokia is bullish. It now expects the industry's cell phone volume to reach 780 million this year vs. an earlier forecast of 760 million.

Last year, 643 million phones were sold.

The real bright spot during the quarter was Nokia's third-generation, or 3G, phone business. Its 3G phones, capable of fast Internet surfing and other features, carry higher prices than regular cell phones.

Nokia was somewhat late to the 3G market while rivals Motorola and LG Electronics embraced the next-generation phones.

Now Nokia says it's the No. 1 3G phone seller. Its sales of 3G phones and other multimedia devices reached $1.7 billion, up 55% from a year earlier.

Even more important, profit in Nokia's 3G phone unit grew 163% to $294 million. Profit margins in the third quarter expanded sharply compared with the second quarter.

Nokia did not give a specific forecast for the fourth quarter. But it said it expected average phone prices to be down again and that sales at its network gear business also would fall.

Analysts polled by Thomson First Call expect fourth-quarter sales of $11.87 billion and earnings of 28 cents a share. Both figures would be down 3% from a year ago.

Hoffman sees a mixed fourth quarter for Nokia. The 3G phone business should perform well, he says, thanks to holiday shopping.

But Motorola is releasing a strong lineup of phones for Christmas as well. And the introduction of some new Nokia phones has been delayed until early next year.

"The hot (Nokia) products aren't going to be there in the fourth quarter," Hoffman said.