Will chip majors net loss reflect in mobile major Nokia quarterly performance?

By Telecom Lead Team: Mobile giant Nokia is
heading for Q4 net loss, according to analysts.

Financial performance of ST-Ericsson and STMicroelectronics
indicates that Nokia’s performance during Q4 will be worse as the mobile major
sources most of its chip component from these two companies.

ST-Ericsson, the biggest chip supplier to Nokia for its Symbian
and Meego operating systems, has posted $231 million loss in its fourth

Loss making quarterly results from ST-Ericsson prompted fears of
a sales slump in the Finnish company’s older smartphones, sending its shares 8
percent lower on January 24.

The chip provider reported widened losses of $841
million for 2011 and predicted that the company could observe significant
sequential decline” in sales the first quarter because of poor sales at Nokia,
which accounts for around 30 per cent of the company’s business.

Another chip supplier, STMicroelectronics reported loss of $11
million in fourth-quarter compared with a year-earlier profit of $219 million,
as sales slumped across all of the chip maker’s main business segments.

The revenues from Nokia have collapsed and this is why revenues
at ST Ericsson are not what we expected,” said Carlo Bozotti, chief executive
of ST Microelectronics, which owns half of ST Ericsson.

Sales of the Nokia Symbian smartphone line declined 36 percent
in the last two quarters
 because of the rapid uptake of cheap Android based smartphones.
According to IDC, Symbian market share may shrink to 0.1 percent by 2015.

Decline in sales of Symbian portfolio will likely to have a
bigger effect on revenue and profit of Nokia. The company could report
fourth-quarter loss of 92 million euros ($119 million), as sales may
have fallen 21 percent to 10 billion euros, according to Bloomberg.


Last year, Nokia dumped its old Symbian operating system in
favor of Microsoft’s Windows phone platform in its smartphones, in order to
compete with popular Apple and Google-based phones.

This year, Nokia is expected to sell around 1 million to 2
million of the new Windows-based phones, which use chips from
Qualcomm. However, it also selected
ST-Ericsson’s NovaThor system-on-a-chip (SoC) in
order to offer cheaper Windows Phones and in new regions.


Nokia launched its Nokia Lumia 900 in the U.S with AT&T over
its 4G-LTE network this month, this addition would further boost the sales of
Lumia portfolio.

Danish Khan
[email protected]