Mobile Weekly Notes: Apple, Nokia, RIM and Motorola

Many companies in the mobile sector saw new developments in the past week. Apple (NASDAQ:AAPL) received the permit for selling the iPhone 4S in China. Motorola Mobility’s (NYSE:MMI) acquisition by  Google (NASDAQ:GOOG) received a temporary setback with EU regulators suspending their review of the merger until more information is made available. Nokia (NYSE:NOK) announced that it will launch the Lumia 710 on T-Mobile’s network January 11th. Towards the end of the week, Research in Motion (NASDAQ:RIMM) announced its earnings results that missed revenue guidance as expected.

Apple

Apple will finally be able to sell the long-awaited iPhone 4S in mainland China, according to a report in the Beijing Morning Post. China’s Ministry of Industry and Information Technology has issued a network permit to China Unicom, the country’s second largest carrier, to sell the phone from this month onward, making it likely that the phone will be available for Christmas. This is good news for both Apple and China Unicom, who will both be looking to capitalize on the increasing popularity of the iPhone among the Chinese to boost market share.

See our full analysis for Apple’s stock here

Motorola Mobility

Google’s acquisition of Motorola Mobility’s will be delayed by a EU regulators’ request that they need more information about the deal before they sanction the merger. Antitrust review does take some time and EU’s request for more information is routine. We believe EU’s request should not concern investors about either of the two companies. The smartphone industry has enough competitors for the regulators to find the merger anti-competitive. If anything, the merger will serve to bring down prices and increase competition. The merger will be complete in 2012 after it secures all regulatory approvals.

See our complete analysis for Motorola stock here

Nokia

Nokia announced Wednesday that it will re-enter U.S. market with the Lumia 710 on T-Mobile on January 11th. ^[1] The entry-level smartphone powered by Microsoft’s latest Mango software will be priced at a cheap $49.99, positioning the phone as an attractive device for first-time smartphone buyers. Nokia is banking on its Microsoft partnership to help it stem market share losses in the developed markets and we will be following closely Nokia’s progress with Lumia and other Windows Phones to be launched in 2012 to see how the bet pans out. As of now, we maintain a conservative stance and expect its market share to continue to decline, albeit at a less rapid rate, before stabilizing in the next few years.

Research in Motion

Research in Motion announced its December ending Q3 FY2012 results Thursday that were below its own guidance levels, as expected. (see RIM Earnings Preview: Another Round of Weak Results Expected) The company reported revenues of $5.2 billion, less than even the lower-end of the expectations it had set for the quarter. ^[2] Although almost 25% higher than last quarter’s revenue, it was still a drop of 6% year-over-year. Further, the company guided for a poor next quarter as Blackberry shipments might suffer due to a less-than-expected sell-through of Blackberry 7 phones this quarter.

The company also said that its new Blackberry 10 phones will not be available until the later part of next year. With BB10 smartphones some way off and Playbook’s update 2.0 also not expected until February at least, the company is relying on its marketing and promotional offers to drive sales of all its devices throughout next year. However, given the poor sales so far, we are skeptical about the company’s ability to sell phones solely based on advertising.

See our complete analysis for RIM stock here

1. Nokia re-enters U.S. market: $50 Lumia 710 for T-Mobile launches January 11th, BGR.com, December 14th, 2011 [↩]
2. RIM’s CEO Discusses Q3 2012 Results, SeekingAlpha Call Transcript, December 15th, 2011 [↩]