Research and Markets: smartphones to grow from 16% to 27% of total handset sales by 2014

Posted by Dennis SellersEmerging markets will become the leading growth engine for smartphone sales over the next five years. China will become the biggest smartphone market in 2010, and other key markets such as Brazil, India, Turkey and Nigeria will record compound annual growth rates above 30% through 2014, according to according to Research...

Posted by Dennis SellersEmerging markets will become the leading growth engine for smartphone sales over the next five years. China will become the biggest smartphone market in 2010, and other key markets such as Brazil, India, Turkey and Nigeria will record compound annual growth rates above 30% through 2014, according to according to Research...

  • Asian Tech Stock Weekly Summary (July 13 - 19)

    JapanHardwareKonica Minolta Holdings Inc. would start output at its new factory in Japan that makes high-tech film used in LCD panels by autumn 2010 due to a strong recovery in panel and TV demand. Konica Minolta had planned to begin production at the new plant in autumn 2009, but the company late last year decided to delay the start-up as the global downturn forced panel makers to cut output. Konica Minolta dominates the global market for triacetyl cellulose (TAC) film, which protects the polarisation plates used in LCD panels, with bigger rival Fujifilm Holdings Corp. Konica Minolta, which also competes with Canon and Ricoh in producing copiers and printers, plans to spend 18 billion yen (US$194 million) to build the new factory, which will be capable of making 50 million square metres of TAC film a year.TelecommunicationsNTT DoCoMo (DCM) president Ryuji Yamada said the Japanese operator is on track for launching its new Long Term Evolution (LTE) mobile network in 2010, reports the Financial Times. The adoption of LTE will see DoCoMo's handsets become compatible with other operators' 3G networks for the first time since the 2001 launch of its FOMA service, which used a WCDMA standard that was slightly different to the one rolled out by the majority of the rest of the world. DoCoMo has learned a hard lesson from being the first operator in the world to launch 3G services. DoCoMo plans to launch LTE handsets in 2011 that are also compatible with its current 3G network, so customers can still access services if they're outside an LTE coverage area. DoCoMo will use its high-speed LTE network to offer mobile content services in a bid to drive new revenue in the saturated Japanese market.Softbank Corp. (SFTBF.PK), Japan's third biggest mobile telecommunications provider, raised 30 billion yen (US$320 million) from the first BBB rated bonds sold to institutions in Japan by a non-utility borrower since Lehman Brothers Holdings Inc.'s collapse in September. The Tokyo-based company, priced three-year, 4.72 percent notes to yield 4 percentage points more than the yen swap rate, according to data compiled by Bloomberg. Softbank, rated the second-lowest investment grade of BBB by Japan Credit Rating Agency, becomes the first non-utility company with that rating to sell bonds to institutional investors in Japan for 10 months. Softbank will use money raised from the securities to repay debt, it said in a filing with Japan's finance ministry today. The company sold 60 billion yen in 5.1 percent fixed-rate bonds to individual investors in May, Bloomberg data show.Softbank casts its eyes on the Greater China Region and inked a strategic cooperation agreement with Shanghai Media Group (SMG) on June 29, 2009. Softbank Founder Masayoshi Son and SMG President Li Ruigang signed on the agreement. The two parties will jointly to develop new media digital content business. Softbank is reported to cooperate with Far Eastone Telecommunications Co., Ltd. in August to launch mobile phone cartoon services. Far Eastone is in talks with Softbank subsidiaries in an attempt to introduce Japan's well-known cartoon works into Taiwan as soon as possible.Semiconductor Japan's Ushio Inc. announced its subsidiary Ushio America Inc. has acquired a 49 percent stake in U.S. firm Necsel Intellectual Property Inc. Necsel has technology for low-cost mass production of visible-laser light sources, and Ushio plans to leverage this to boost its own competitiveness in the markets for light sources for data projectors and digital cinema display systems. Using the technology, Ushio will be able to broaden its lineup of light sources to include semiconductor lasers across the complete spectrum of visible wavelengths. The company plans to purchase the remaining 51 percent of Necsel over the next five years and turn the unit into a wholly owned subsidiaryMedia, Entertainment and GamingSquare Enix Holdings Co. (SQNXF.PK) has shipped three million units of its "Dragon Quest IX" video game software in Japan since its release. In total, global shipments of the "Dragon Quest" series have surpassed 50 million units since the popular franchise debuted in 1986. Sales of the highly anticipated latest installment are going strong, too, with some 2.5 million units flying off the shelves in its first three days on the market -- beating the roughly 2.4 million of "Dragon Quest VIII," which was released in 2004. For the first time in the series, "Dragon Quest IX" runs on the Nintendo DS hand-held system. And through Wi-Fi wireless technology, up to four nearby gamers can play together.KoreaTelecommunicationsSK Telecom Co. (SKM) is considering bidding for Kazakhstan's Mobile Telecom-Service, as part of its recent efforts to seek business opportunities overseas. Kazakhtelecom, Kazakhstan's incumbent telecommunications operator, said in late June that it plans to sell its 51 percent stake in Mobile Telecom-Service and that it would accept letters of intent from potential bidders by and final bids by Aug. 31. Mobile Telecom-Service, Kazakhstan's smallest GSM operator, was launched in 2007 and provides services under the brand Neo with 920,000 subscribers.Mobile/WirelessEricsson (ERIC) plans to invest US$1.5 billion in South Korea over the next five years. The company would set up a research centre in the Asian nation to develop environmentally friendly and fourth-generation wireless technologies. Ericsson also planned to increase the number of employees at its Korean unit to 1,000 from 80. The Korean government was determined to provide a level playing field for foreign businesses to compete with domestic rivals. The investment was expected to help boost Korea's competitiveness in the market for long-term evolution, or LTE, high-speed wireless technology, backed by Ericsson. AT&T and Verizon Communications are also choosing the standard. Verizon Wireless, the biggest U.S. mobile-telephone company, aims to begin offering a high-speed network in all U.S. regions by 2015 using LTE, which is scheduled to reach 30 markets by next year. LG Electronics, Asia's second-largest mobile-telephone maker, in December said it developed a faster wireless chip used in mobile telephones based on the technology.BiotechnologySamsung Electronics plans to invest about 500 billion won (US$389 million) in the biotech medicine business. Korea's economy minister Lee Youn-ho said that Samsung, the world's top maker of memory chips and flat-screen TVs, would spend the amount over the next five years on the biosimilar business. Biosimilars are versions of biopharmaceuticals whose patents have expired. Samsung declined to confirm the size of the investment but said biosimilars presented a new growth opportunity for the technology giant. Lee signed a letter of intent with several domestic firms, including Samsung Electronics and LG Life Science, on their investment in a government biosimilar industry development initiative, with Korea Development Bank and a state-led fund already committed to providing financial support.ChinaInternetChina's Ministry of Commerce (MOC) has not ruled against the proposed merger between Sina (SINA) and Focus Media (FMCN); documents for the merger have not yet been put on MOC records. Focus Media CEO Jason Jiang is "quite anxious" about the merger, and said recently that the MOC has continuously asked for more documentation. The companies first submitted an application for their merger in late December 2008.As of the end of 2008, China saw a netizen base of 298 million, and an Internet penetration rate of 22.6 percent, outracing the global average level of 21.9 percent.Mobile/WirelessA total of 13.21 million mobile phones were sold in China in May 2009, up 9.6 percent from the previous month. The number of GSM mobile phones sold in May increased by 12.5 percent month-on-month to 11.06 million units, while only 2.15 million CDMA handsets, which included 39,800 3G CDMA 1xEVDO handsets, were sold in May, down 3.4 percent from April. The dip in CDMA mobile phone sales is the result of China Telecom's shift in focus from 2G to 3G. In addition, both China Mobile and China Unicom implemented subsidies within their 3G service plans in 2009 to attract more users. Five foreign brands, Nokia, Samsung, Motorola, Sony Ericsson and LG, accounted for a 65.6 percent share of China's mobile phone market in May. Nokia had the largest market share of 31.9 percent last month. Domestic mobile phone manufacturer ZTE was the sixth-largest brand in May with a 3.8 percent market share.Z-Obee Holdings, which provides design services for mobile-telephone manufacturers on the mainland, has launched its own handset brand to meet the country's growing demand for stylish wireless devices. The Singapore-listed company's new "Vim" brand for the mainland mobile-telephone market will cater to price-conscious consumers keen on using fashionable, easy-to-operate handsets. The firm's production road map includes launching a new model every 45 days, which would enable it to introduce at least eight models in Hong Kong and on the mainland each year. The initial batch of Vim handsets being introduced on the mainland includes a his and hers model designed for couples that has a text message authentication function. This allows text correspondence between the pair to be decoded with a specific password for privacy. Each Vim handset has a voice diary function, allowing users to record appointments on the phone and be automatically reminded by the device at the designated time.TelecommunicationsChina Mobile Ltd. (CHL) will invest 70 billion yuan (US$10.2 billion) in building and upgrading its telecommunications networks, and promoting the use of its 3G services in the country's vast rural areas over the next three years. The ministry will help it promote the adoption of 3G-enabled applications in rural areas.China's three telecoms carriers, China Mobile, China Unicom (CHU) and China Telecom (CHA), injected more than 100 million yuan (US$14.6 million) in online advertising for two consecutive months of May and June. Their online ads expenses amounted to 198 billion yuan in May, when it welcomed the World Telecommunications Day on May 17, and China Unicom started trial operation of WCDMA. China Unicom's online ads input reached 78.79 million yuan on that month. In the same period, the carriers paid large amount of money in TV advertising as well, shouldering into prime time of CCTV, China's leading television station. Their expenses on online advertising fell, but still stayed above 100 million yuan to 115 million.ZTE Corp. (ZTCOF.PK) has captured 34 percent of the latest 8.6 billion yuan (US$1.3 billion) 3G network expansion tender by China Mobile Communications Corp. Huawei Technologies won 22 percent while partner Nokia Siemens Networks claimed 7 percent. Datang Mobile Communications Equipment and domestic partner FibreHome Technologies ranked third with a 21 percent share. The rest went to China Putian, New Postcom and Ericsson, each winning five to six percent. ZTE and Huawei were helped by their offers of a free upgrade in China Mobile's existing TD-SCDMA equipment, which was installed in the previous two phases of network construction. Industry watchers said China Mobile's preference for supporting domestic vendors and homegrown technologies also enabled ZTE, Huawei and Datang to take a bigger share. As a result, foreign vendors' share was shrinking. The latest tender was the third by China Mobile for a network covering 200 cities or 70 percent of the areas on the mainland. The original contract size was about 8.6 billion yuan for the installation of 39,000 base stations.China Unicom aims to go up against market leader China Mobile for high-end users as early as October, thanks to its exclusive sales agreement for the popular Apple (AAPL) iPhone handset. Unicom and Apple are expected to announce a schedule for the iPhone's introduction soon. Meanwhile, industry sources have confirmed that Apple has already submitted the device to a Ministry of Industry and Information Technology laboratory for official approval. Unicom and Apple could not be reached for comment on the deal, but telecommunications sources said Unicom would launch the handset in the fourth quarter when its 3G mobile network will cover 284 cities across the country, up from 55 cities at the end of last month. The full commercial launch of its 3G network plus the exclusive deal with iPhone is expected to put pressure on China Mobile to defend its high-end users.HardwareGreater China is expected to see an almost fourfold increase in demand this year for mini-notebooks, commonly known as netbooks, as computer makers aggressively market the low-cost devices amid the economic downturn. That growth spurt is likely to boost sales for the market's leading notebook personal computer suppliers - including mainland Lenovo Group (LNVGY.PK), Hewlett-Packard (HPQ), Dell (DELL), Toshiba (TOSBF.PK), Acer and AsusTek Computer (AKCPF.PK) and operators of high-speed 3G mobile networks. Netbook shipments on the mainland, Hong Kong and Taiwan are forecast to hit 3.9 million units, up nearly 260 percent from 1.1 million units last year. The market research firm said total industry shipments would reach nearly 33 million units, up from its earlier estimate of 27 million units. That would result in a global netbook penetration of about 20 percent and flat year-on-year demand for pricier, full-featured laptops. Many buyers were adjusting their discretionary spending and were buying netbooks as lower-priced alternatives to traditional laptops. Netbooks are smaller than typical laptops, carry few software applications and are mainly used for wireless internet access.Lenovo Group plans to expand its sales network coverage from more than 100 Indian cities to more than 300 within 2009. The company is currently restructuring to divide its global business into mature and emerging markets. Lenovo previously will open 30 retail locations in India to bring its store total to 150 and expand its service centers from 130 to 250.Shenzhen-based Coship Electronics Co., Ltd. has won an order worth US$21 million from EMB, an old customer in South America to supply digital TV set-top boxes. The order from EMB represents about 6.79 percent of Coship's total operating revenue in the entire 2008 and is the first overseas contract that Coship makes public this year. In November 2008, Coship got a set-top box order valued at US$12.21 million from the South American company. Coship had sold set-top boxes worth 120 million yuan (US$17.5 million) to EMB as of June 30, 2009, eight months after it secured the first order from the latter. The Shenzhen company, engaged in the production and sales of digital TV equipment and electronics, saw its digital TV set-top box software and hardware sales revenue account for 93.94 percent, 96.83 percent, and 95.94 percent of its revenue from major business in 2003, 2004, and 2005, respectively.TCL Corp. said that its net profit may plunge 80 percent from a year earlier to 85 million yuan (US$12.4 million) during the first half of this year. TCL Communication Technology Holdings Ltd, one of TCL's subsidiaries, saw sales of handsets and accessories slide 12.32 percent year on year to 1.02 million units last month, while its first-half sales declined 24.69 percent from a year earlier to 5.06 million units. TCL Multimedia Technology Holdings Ltd, another subsidiary of TCL Corp, sold 616,898 LCD TVs in June, up 60.3 percent from a year earlier, and 342,353 CRT TVs, down 56.1 percent year on year. TCL sold more than 2.31 million LCD TVs in the first five months of this year, representing a year-on-year increase of 103.7 percent. The sales volume of LCD TVs in the first five months accounts for nearly 60 percent of the company's sales in 2008.Alternative EnergySuntech Power Holdings (STP) plans to invest 30 billion yuan (US$4.4 billion) in the four projects with a combined capacity of 1.8GW that it signed up to in recent weeks. The money represents just the initial investment. China's long term plan for the PV industry is 70 percent of projects will be on-grid and 25 percent building integrated PV.LDK Solar Co. (LDK) has purchased a 70 percent stake in Italian systems integrator Solar Green Technology for an undisclosed sum. The move is expected to enhance LDK Solar's presence in the Italian photovoltaic sector. In addition, the deal will help Solar Green Technology grow further through its partnership with LDK Solar for several projects in Italy and Europe.ReneSola Ltd. (SOL) has successfully commenced trial production on the first batch of polysilicon from Phase 1 of its two-phase, 3,000 metric ton annualized capacity polysilicon manufacturing facility located in China's Sichuan province. ReneSola's two-phase, 3,000 MT annualized capacity polysilicon manufacturing facility utilizes the Siemens process and a closed loop system to produce polysilicon. Phase 2 of the facility, representing approximately 1,500 MT annualized capacity, is scheduled to reach mechanical completion in September 2009.

  • Wall Street Breakfast: Must Know News

    Jobs growth arrives. Nonfarm payrolls rose by 162K in March, the biggest monthly advance in three years and the first convincing evidence since the recession began that the job market is recovering. Job creation was spread across industries, suggesting the uptick reflects broad economic momentum. Still, the duration of unemployment remains near record highs, and the number of long-term unemployed (+27 weeks) rose by 414K to 6.5M. Economist Heidi Shierholz summed up the Street's cautious optimism: "We have had this massive disaster, but we're at a place now where things are stabilizing. But it's nowhere near the level of growth we need to start moving the dial." Stock markets were closed Friday, giving investors the long weekend to mull the data's significance going into the new week. Geithner delays call on China currency manipulation. Treasury's Tim Geithner is delaying his April 15 report to Congress on the exchange rate policies of major U.S. trading partners, buying time to decide whether to label China as a currency manipulator. Geithner urged China to move toward a more flexible currency, and said the goal of the delay is to capitalize on "the G-20 and S&ED meetings with China to make material progress in the coming months." In another indication of a possible China-U.S. detente over the yuan, Li Daokui, a member of China's central bank monetary policy committee, said the countries' currency disagreement can be easily solved as long as the U.S. respects China's "core interests." The delay, and Li's comments, come ahead of Chinese President Hu Jintao's trip to Washington D.C. on April 12-13. NBER official says recession has ended. There's been no official word from the National Bureau of Economic Research, but a key official says the recession is likely over. Robert Hall, head of the NBER's Business Cycle Dating Committee, referencing Friday's payrolls figure, said he "personally put lots of emphasis on employment. I would say 'pretty clear' is a good description" for whether the economic contraction has ended. An official announcement from the NBER may still be some time away, however, as the committee won't make a declaration until it can assign a precise end date to the recession, a process which usually takes 6-18 months. Criminal charges unlikely in AIG probe. Two years after federal prosecutors launched an investigation into the role of AIG's (AIG) executives in the insurer's collapse, the probe will likely end without a single criminal charge, sources say. Former AIG executive Joseph Cassano has been at the center of the probe, but the case against him has reportedly "hit a brick wall," with investigators unable to uncover evidence that Cassano lied to his bosses or shareholders about the company's financial problems. iPad debut. Apple (AAPL) enthusiasts lined up Saturday morning to get their hands on a spanking new iPad (teardown), but once doors opened things were relatively tame, with some reports of sellouts, but many store managers saying they were well stocked. Piper Jaffray analyst Gene Munster - a respected Apple authority - estimates first-weekend sales at 600-700K, vastly stronger than his initial projection of 200-300K. But launch sales could be tempered by the fact that customers have been able to pre-order the iPad for home delivery, and because 3G-enabled iPads only begin selling later this month. Backlash against iron ore pricing. The China Iron and Steel Association (CISA) has asked domestic steel companies and traders with import licenses not to buy iron ore from Vale (VALE), Rio Tinto (RTP) and BHP Billiton (BHP) in the next two months, in protest of the new quarterly iron ore pricing system. CISA believes global iron ore producers have made "unreasonable requests for price hikes," and Chinese steelmakers have enough iron ore inventory to sustain a two-month buying moratorium. Faulty paperwork at center of foreclosure probe. Docx, a unit of Lender Processing Services (LPS) - which provides backoffice services for banks in the foreclosure process - is being investigated by federal prosecutors for criminal violations. A U.S. government lawyer who monitors bankruptcy courts believes some of LPS's loan documents were "patently false or misleading"; among the docs being reviewed is one that names "Bogus Assignee" as the owner of a loan (a company spokesman says that this phrase is used as a placeholder and was inadvertently not updated). Faulty paperwork has been an ongoing issue in foreclosure proceedings since the housing crisis began. Signs of life in real estate? Two possible signs of a possible real-estate rebound, one each from the west and east coasts. Home prices in so-called sand states - the sandy, sunny retreats that lured investors during the boom and were among the hardest hit in the bust - are starting to recover. In areas of California, prices for single-family homes are up 8.5%-14.7%, and in Arizona prices are up 7.4%. Florida and Nevada, in contrast, have yet to see a meaningful bounce. And in Manhattan, apartment sales doubled in Q1 as bargain hunters scooped up condos at prices about 29% below the peak. CEO pay falls for the second year. Pay czar Kenneth Feinberg is making his mark. A report analyzing the compensation for 200 chief executives of public companies found that pay dropped 15% in 2009, the second annual decline. The average total was $9.5M in 2009, roughly comparable with 2004. However, last year's drop was largely due to a decline in the value of stock and option awards, which means a handful of lucky CEOs received a windfall when share prices rose. Alan Mulally of Ford (F), for example, saw his 2009 options package grow nearly 10 times in value, to more than $50M. Today's MarketsIn Asia, Japan +0.5%. Hong Kong closed. China closed. India +1.3%. In Europe at midday, London closed. Paris closed. Frankfurt +1.3%.Futures: S&P +0.23%. 10-yr -0.05%. Euro -0.21% vs. dollar. Crude +0.57% to $85.35. Gold +0.04% to $1126.60. Monday's Economic Calendar Monday's economic calendar: 10:00 ISM Non-Manufacturing Index 10:00 Existing Home Sales 10:00 Employment Trends Index Seeking Alpha editors Rachael Granby and Eli Hoffmann contributed to this post.

  • Wall Street Breakfast: Must-Know News

    Warner Chilcott to buy P&G drug business. Warner Chilcott (WCRX) reportedly plans to buy Procter & Gamble's (PG) prescription-drug business for around $3.1B in a deal that could be announced as soon as today. Six banks, including JPMorgan Chase (JPM), Bank of America (BAC), Credit Suisse (CS), Citigroup (C), Barclays (BCS) and Morgan Stanley (MS), will provide $4B in financing in a further sign that the market for loans on leveraged deals may be recovering. Warner Chilcott will use around $1B to refinance existing debt. PG +0.8% premarket (7:00 ET). Chinalco, Rio in talks. Rio Tinto (RTP) said it's in early-stage talks with Chinalco (ACH) over a possible bauxite and alumina deal, though Chinalco wouldn't confirm the talks and said only that it's open to discussions on the matter. Negotiations between the two companies, which have adjacent bauxite deposits in Australia, would be a significant step in reducing recent tensions between Rio and China. Premarket: RTP +3.3%, ACH +1.6% (7:00 ET). Roubini: Double-dip recession risk is rising. In an op-ed in the Financial Times, economist Nouriel Roubini warned there is a growing risk of a double-dip recession. Lawmakers are "damned if they do and damned if they don't," since unwinding stimulus policies too soon could undermine a recovery but running large deficits could push up borrowing rates and cut off economic growth as well. The economy also runs the risk of a contractionary shock if speculation drives oil back over $100, and energy, food and oil prices are rising faster than fundamentals warrant. Foreign firms circle failing U.S. banks. As expected, BBVA, Spain's second-largest bank, assumed the deposits of Guaranty Bank (GFG) on Friday, becoming the first foreign company to buy a failed U.S. bank in the current crisis. Other foreign banks, including Toronto-Dominion Bank (TD) and BNP Paribas (BNPQY.PK), have expressed an interest in picking up failed U.S. banks as well. Though the FDIC may be uncomfortable with handing over a failed bank to a firm with no regulatory history in the U.S., its primary consideration at the moment is limiting the cost of bank failures to its dwindling insurance fund (see below). In the case of BBVA and Guaranty, a loss-sharing agreement on $11B in assets will cost the FDIC around $3B. Many, many more bank failures ahead. Eighty-one banks have failed so far this year, but analyst Richard Bove warned another 150-200 will fail in the current banking crisis, placing a serious strain on the FDIC's insurance fund. The failures will also put pressure on the banking industry, which could see as much as 25% of its 2010 pretax income go towards FDIC fees. Hummer gears up for new owner. General Motors will reportedly sign off on the sale of its Hummer unit this week to Sichuan Tengzhong Heavy Industrial Machinery Co. Executives of the Chinese machinery maker are expected to arrive in Detroit this week to complete negotiations, with final approval of the deal subject to U.S. and Chinese authorities. Separately, GM failed to choose a buyer for its Opel unit on Friday, creating a delay that has angered many German leaders and raising the possibility of an Opel insolvency or a GM push to retain ownership of the unit. Chancellor Angela Merkel said a decision is 'urgently' needed and reiterated her support for Magna International's (MGA) bid. Time for a broad stock market review. Sen. Ted Kaufman is expected to call for the SEC to review all forms of the current stock-market structure, arguing regulatory decisions over the last decade have made the stock market too fragmented and have created the possibility for manipulation and conflicts of interest. In a letter to be sent to the SEC's Mary Schapiro today, Kaufman will request the SEC "undertake a comprehensive, independent 'zero-based regulatory review' of a broad range of market-structure issues, analyzing current market structure from the ground up before piecemeal changes built on the current structure increase the potential for execution unfairness." AT&T denies role in blocking Google app. AT&T (T) told regulators it played 'no role' in Apple's (AAPL) decision to block the Google Voice (GOOG) application for the iPhone. For its part, Apple said it hasn't blocked the application but rather is studying the application further before approving it, a claim that some sources call a 'total lie' meant to save face before Apple backtracks on its earlier rejection. The Federal Communications Commission is looking into why the Google app hasn't been approved, though it has not yet opened a formal investigation. (Read Apple's response to the FCC and AT&T's response to the FCC) Nokia declares smartphone war. Nokia (NOK) has promised to more effectively fight back against Apple (AAPL) following criticism that it has failed to come up with a worthy competitor to the iPhone. After losing market share to Apple and Research in Motion (RIMM), Nokia plans to release a new device this week featuring a Linux operating system as part of its comeback strategy. It also aims to transform itself from a mobile manufacturer into a supplier of handset services, and is expected to unveil plans to sell a netbook. NOK +1.1% premarket (7:00 ET). China steps up as commercial property player. China outpaced the U.S. and U.K. combined in H1 commercial property sales with a total of $31.2B in transactions. In contrast, U.S. sales were just $16.2B and the U.K.'s were $13.7B. Though analysts noted this pace of growth may not be sustainable, "there's no question that China will be a more significant player on the world stage for commercial property transactions versus other Western countries." HSBC joins ETF fray. HSBC (HBC) is launching its first European ETF today, which will track London's FTSE 100 index. The move is part of an ambitious plan to become a major player in the $183B European ETF market, especially as demand for passive investment vehicles rises in a backlash against the high costs and poor performances of some active funds. Other banks are planning similar launches. Today's MarketsAsian markets showed strength this morning and European markets are trading at ten-month highs. U.S. futures are up slightly but have yet to see a major bump from gains in Asia and Europe.

  • iPhone has 17% of the smartphone market; ending AT&T exclusivity in the US could boost that number

    Posted by Dennis SellersA dramatic shake-up in the U.S. market for new handset sales will ensue as smartphones grow to comprise roughly 60 percent of new handsets sold in the U.S. by 2014, according to the latest forecast data from Pyramid Research, the telecom research arm of the Light Reading Communications Network. And things...

  • Wall Street Breakfast: Must-Know News

    Management shake-up at Fannie. Fannie Mae (FNM) announced broad changes to its top financial management in an attempt to create an executive team that can stem growing credit losses and conserve capital. Stephen Swad, formerly the CFO, was replaced, as was the chief risk officer, and Peter Niculescu, the chief business officer, will have expanded responsibilities. Daniel Mudd will retain his position as CEO. Fannie Mae shares were up on Wednesday for the third day in a row as investor fears about a government bailout abated. Dollar intervention planned, abandoned. The U.S., Europe, and Japan created a dollar rescue plan in March when the currency was plummeting, reports the Nikkei business newspaper. The officials did not choose which exchange rate would trigger the plan, but were prepared to aggressively buy dollars and sell yen in the event of strong dollar weakness. The intervention was never put into action, but makes some investors wonder whether a future fall in the dollar could spark a new multi-governmental rescue plan. After you finish reading Wall Street BreakfastSeeking Alpha's Market Currentswill keep you current all day long. U.S. companies might start using international accounting rules. The SEC proposed a tentative timeline on Wednesday that could require U.S. companies to switch to international accounting standards by 2014. Until now, the U.S. has used Generally Accepted Accounting Principles [GAAP], which are considered less flexible and more clearly defined than the international financial reporting standards [IFRS] used in Europe and in dozens of other countries. The timeline fits with a global plan to converge GAAP and IFRS, a move that would be welcome to many in the accounting industry. Sears seared by frugal consumer. Sears (SHLD) posted worse-than-expected Q2 earnings (see below) as shoppers cut back on appliances and clothing purchases. The results "reflect the continued effects of a slowing economy which contributed to the earnings declines we have experienced since the third quarter of 2007," it said. Inventories fell by $500M, which should allow it to reduce markdowns and boost its margins. Gross margin fell 1.2% to 26.5%. Same-store sales fell 6.2% - less than Q1's 8%+ drop. "Despite the difficult economic environment, we remain focused on long-term value creation and continue to invest in the future of the company," CEO Bruce Johnson said. Toyota slashes sales targets, production. Toyota Motor (TM) cut its 2009 growth forecast for auto sales to 2.1% from 5.6%. Toyota, the world's second-largest carmaker, will reduce production in the U.K. and Poland, and has already announced cuts in the U.S., its biggest market, where it has lowered its growth target by 10%. iTunes sees music label backlash. A growing number of record companies are trying to avoid Apple's (AAPL) iTunes store, arguing that selling individual songs is hurting overall music sales and is less profitable than selling complete albums. iTunes sells at least 90% of U.S. digital downloads, and it is widely believed in the industry that downloads will eventually replace CDs. Still, not everyone is ready to switch to the new model. Says one holdout manager, iTunes is "part of the death knell of the music business." Signs of a music piracy crackdown. The FBI arrested a man for copyright-infringement after he posted songs from a not-yet-released commercial album on his website, possibly signalling a new, more aggressive stance in the battle against online music piracy. The Recording Industry Association of America [RIAA] says that a lack of deterrents has allowed online piracy to flourish and that a more aggressive approach would be welcome. MBIA to reinsure FGIC municipals. MBIA (MBI) has agreed to backstop $184B in FGIC municipal bonds. FGIC's future remains uncertain and the reinsurance agreement allows it to focus on other problems connected to mortgage securities. MBIA will receive a $741M premium. Mortgage apps climb slightly. MBA Mortgage Applications rose 0.5% to 421.6, the first increase in three weeks. The 30-yr. fixed mortgage rate fell to 6.44% from 6.47%. Bankruptcies soar. Bankruptcy filings shot upwards in the year ending June 30, to nearly 1M total. Business filings were up 41% and personal filings rose 28% on the previous year. Filings are expected to reach 1.2M this year. Job market confidence same as 2001. in the A new survey shows worker confidence at a low last seen during the 2001 recession. With unemployment at a four-year high, 65% of respondents said this is a bad time to find a quality job, and 33% of workers said they don't always have enough money to make ends meet. Durable goods show surprise growth. July durable goods orders rose an unexpected 1.3% on strong transportation equipment demand vs. a consensus 0.2%. Excluding transportation, orders rose 0.2%. U.S. Treasury debt prices fell as the report suggested resilience despite the deep housing correction and credit crunch. Lockhart: Fed prepared to raise rates when needed. Federal Reserve Bank of Atlanta President Dennis Lockhart said Wednesday that the Fed's interest rate is consistent with slowing inflation, and signalled readiness to raise borrowing costs if such a move is needed. UK housing woes continue. UK home prices fell 10.5% in August, the biggest annual drop in 18 years. The 1.9% drop from July was the 10th straight monthly decline. Including inflation, residential real estate could lose 1/5 of its value in 2008. Europe retail sales contract, again. Euro-region retail sales fell for the third straight month amid high inflation and economic weakness. "Inflation is squeezing disposable incomes and the outlook for consumer spending and for retailers is gloomy," economist Ken Wattret said. HK exports bounce back. Hong Kong's exports grew 11.1% in July vs. last year after slipping 0.6% in June. Economists expected a 5.5% gain. "The weakness in the U.S. economy is expected to continue to drag down Hong Kong's export performance," the government said. HK's economy "stayed in a good shape, virtually unscathed by the global credit market turbulence." (ETF: EWH) Earnings: Thursday Before Open Diageo (DEO): FH2 profits fell 8.1% to Ł546M ($1B). Sales rose 9.9% to Ł3.8B. Full-year profit climbed 2.1% to Ł1.52B, just short of the Ł1.56B consensus. DEO sees 2009 operating profit growth of 7-9%, vs. this year's 9%. Shares -0.9% in London. [Bloomberg] Sears (SHLD): Q2 EPS of $0.21 misses by $0.12. Revenue of $11.8B (-4.1%) vs. $11.7B. [PR] Vimpel-Communications (VIP): Q2 EPS of $0.46 misses by $0.15. Revenue of $2.61B (+52%) vs. $2.65B. [PR] Earnings: Wednesday After Close Benihana (BNHN): FQ1 EPS of $0.12 misses by $0.04. Revenue of $94.5M (+5.1%) vs. $92.7M. [PR] Coldwater Creek (CWTR): Q2 EPS of $0.04 beats by $0.03. Revenue of $241M (-0.9%) vs. $242.5M. [PR] FuelCell Energy (FCEL): FQ3 EPS of -$0.39 misses by $0.12. Revenue of $27.9M (+106.7%) vs. $21.1M. [PR] Giant Interactive Group (GA): Q2 EPS of $0.2 in-line. Revenue of $73.6M (+36.3%) vs. $72.2M. [PR] Greif Bros. (GEF): FQ3 EPS of $1.18 beats by $0.05. Revenue of $1.0B (+18.3%) vs. $927M. [PR] Heico (HEI): FQ3 EPS of $0.47 beats by $0.01. Revenue of $147M (+10.6%) in-line. [PR] Jo-Ann Stores (JAS): Q2 EPS of -$0.47 beats by $0.19. Revenue of $403M in-line. [PR] Men's Wearhouse (MW): Q2 EPS of $0.72 beats by $0.02. Revenue of $545M vs. $556M. Sees Q3 EPS of $0.36-0.40 vs. $0.53. [PR] TiVo (TIVO): Q2 EPS of $0.03 beats by $0.05. Revenue of $53.5M vs. $55.3M. Sees Q3 revenue of $49-51M vs. 57M. [PR] Today's Markets Asia markets closed mixed. Nikkei +0.1% to 12,768. Hang Seng -2.3% to 20,972. Shanghai +0.3% to 2,350. BSE -1.7% to 14,048. In Europe at midday, London -0.3%. Paris -0.5%. Frankfurt -0.6%. U.S. index futures are largely unchanged at 7:00 AM, with light overnight volume. Dow -0.03%. S&P -0.04%. Nasdaq -0.14%. Crude +1.18% to $119.55. Gold +0.94% to $841.80. Thursday's Economic Calendar Thursday's economic calendar: 8:30 Corporate Profits 8:30 GDP (preliminary) 8:30 Jobless Claims 10:35 EIA Natural Gas Report 11:00 Kansas City Fed Mfg Survey 4:30 PM Money Supply Notable earnings before Thursday's open: DLM, ENER, SHLD, TIF, VIP, WSM Notable earnings after Thursday's close: DELL, MRVL, NOVL, OVTI, PETM, SIGM, WIND Seeking Alpha editor Eli Hoffmann contributed to this post.

  • Android Outselling iPhone? No Surprise There

    The big news early this week about Apple isn't the commencement of pre-order sales in nine international markets that happened Monday, it's a report by the NPD group (via AllThingsD) that sees Android smartphones outselling Apple's iPhone. The question is, why? Sure, it's a major milestone for the Android OS. According to NPD, which specializes in researching consumer data trends, Google grabbed 28 percent of the market in the first three months of this year, compared to only 21 percent for Apple. Both still fell behind BlackBerry, by the way, with RIM's phones taking 36 percent. So Android's selling well, which is good for Google. But is this a sign of trouble for the future of Apple's iPhone? I think not, and I'll give you a few good reasons why. Android is Promiscuous Oh Android OS, what device won't you appear on? Google's operating system has the definitive advantage of being a product any hardware manufacturer can license for use on its smartphone devices. That means that Motorola, HTC, and Samsung are all making Android-powered devices. Google's made licensing the Android OS so attractive to handset makers that it was pretty much bound to become the OS of choice, with users soured on Windows Mobile and Palm's failed attempt at a comeback. If Android is powering, let's say, 15 devices currently available from all of the major U.S. carriers, and Apple's iPhone OS is only powering one (or two if you count the 3G and the 3GS as distinct products), then it stands to reason that Google's operating system would have the advantage in terms of market coverage. In fact, it's a surprise that it isn't doing better when you consider how far it's extended its device offerings. Apple is at the End of a Product Cycle What has 2010 brought for Apple so far? Only one of the most successful product launches in history, for a device that basically created its own niche. Of course I'm talking about the iPad. The iPad was bound to steal some focus away from the iPhone, and may even have nabbed some dollars previously earmarked for Apple's smartphone. And even if the iPad isn't significantly affecting iPhone sales, people by now are probably becoming more familiar with Apple's yearly product cycle, which means that many more would likely be aware that a new version of the iPhone is almost certainly in the works and on track for a June/July release date. I know I've advised anyone who will listen to consider waiting until after WWDC before making an iPhone purchase, if they were considering one to begin with. Where it Wants to Be Apple's smartphone OS market share dropped in the first quarter of 2010, that's true. So did the market share of every other OS except for Android. Which means that as Android catches on with manufacturers, the market is adjusting and making room. Apple's drop still hasn't been nearly as steep as RIM's, Palm's or Windows Mobile's. The bottom line is that Apple is still very much where it wants to be. It doesn't need to absolutely dominate the market to be successful, and its design, sales strategy and product lifecycle all emphasize consistent growth and stability over the kind of meteoric rise and resulting volatility Android leans toward with its licensed software approach. Related GigaOM Pro Research: Who Owns Android’s Future? Google — Or Apple?

  • Wall Street Breakfast: Must-Know News

    Towering list of troubled banks. The FDIC's watchlist of potentially problematic banks grew by more than a third to 416 in Q2, the highest level in fifteen years and equivalent to around 5% of the country's banks. The deposit insurance fund, which protects more than $4.5T, fell to $10.4B from $13B in the previous quarter (though that news should perhaps be less troubling to investors than some headlines suggested). Bank loan loss provisions rose to $66.9B from $60.8B, while the U.S. banking industry posted a net loss of $3.7B after a profit of $7.6B in Q1. FDIC's Sheila Bair acknowledged the heavy costs of rising bad loans and falling asset values, but noted "banking industry performance is, as always, a lagging indicator." (Read the FDIC's press release) Fed may trim planned MBS purchase. The Federal Reserve may not need to buy back the full $1.25T in mortgage-backed securities the bank is authorized to purchase by the end of the year. Richmond Fed President Jeffrey Lacker said the bank will evaluate “whether we need or want the additional stimulus” from buying the full amount, while St. Louis Fed President James Bullard said "it might not be necessary." However, even if the Fed chooses to stop short of the full $1.25T of purchases, Bullard said total spending would still be close to that target. (Read Lacker's speech) GDP shrinks less than expected. GDP fell an annualized 1% in the second quarter, in-line with an estimate released last month but better than the 1.5% contraction economists expected. Business inventories fell a record $159.2B, worse than the $141.B estimated earlier. However, analysts believe the fall in inventories has likely reached its bottom and, excluding inventories, GDP rose 0.4%, its first gain in a year. Personal consumption was down 1%, better than the -1.2% prior estimate and consensus of -1.3%. (Read the BEA's GDP report) Sweden goes negative. Swedish Riksbank became the first central bank in the world to introduce negative interest rates on bank deposits. Riksbank is hoping the move will encourage banks to lend more. The move will be closely watched by other central banks, and Bank of England's Mervyn King has already hinted he may follow Sweden's lead to avoid a liquidity-trap in the U.K. Benmosche helps AIG rally. Shares of AIG (AIG) continued to rally yesterday, gaining nearly 27% after new CEO Robert Benmosche said he's been in contact with former chief Hank Greenberg, hoping to draw on his advice about problems at the bailed-out insurer. Benmosche also reiterated his intent to take a slower approach to asset sales, giving the market a chance to recover first because "if we sell too soon, everyone loses." Separately, a recently obtained draft of a Treasury document called the government's investment in AIG 'highly speculative,' a phrase later omitted from a final version of the document. Google News faces antitrust probe. Italian antitrust regulators have opened an investigation into Google News (GOOG), concerned the service may be an abuse of the company's dominant position on the internet. The investigation marks the first time Google News has faced a complaint on competition rather than copyright grounds. China iPhone in Q4. China Unicom (CHU) said Apple's (AAPL) iPhone will go on sale in China in Q4, and both the original iPhone and a 3-G model will be available. Apple will face competition for Chinese marketshare from Research in Motion's (RIMM) Blackberry and smartphones powered by Google's (GOOG) Android software. Dell doesn't disappoint. Dell (DELL) posted better-than-expected Q2 results yesterday (see details below) after cutting costs by contracting out more production. Dell, which is trying to save $4B annually, managed to raise gross margins to 18.7% by farming out as much as 40% of the company's manufacturing. The company said it's seeing "seasonal demand improvements" in both its consumer and government businesses. U.S. jobless claims dip down. Initial Jobless Claims registered 570K, down 10K from a week ago (revised) but worse than the 565K consensus. Continuing claims fell 119K to 6.133M. Japan's joblessness rises. Japan's jobless rate rose to a record 5.7% in July, threatening to undermine the country's recovery efforts and a punishing blow to Prime Minister Taro Aso ahead of elections his ruling Liberal Democratic Party will likely lose. Consumer prices dropped a record 2.2% compared to the previous year. U.K. GDP contracts. U.K. GDP contracted 0.7% in the second quarter, slightly better than the previous estimate of 0.8%. The economy shrank 5.5% from a year ago, the most since records began in 1955. Earnings: Friday Before Open Tiffany (TIF): Q2 EPS of $0.46 beats by $0.13. Revenue of $612M (-16%) vs. $602M. Sees full-year EPS of $1.65-1.75 vs. $1.58 consensus. (PR) Earnings: Thursday After Close Aruba Networks (ARUN): FQ4 EPS of $0.03 beats by $0.01. Revenue of $53M (+11%) vs. $49M. (PR) Bebe Stores (BEBE): FQ4 EPS of $0.00 misses by $0.01. Revenue of $130M (-24%) vs. $129M. Sees Q1 EPS of -$0.05 to $0.00 vs. $0.04. (PR) Cost Plus (CPWM): Q2 EPS of -$0.90 misses by $0.06. Revenue of $183M (-13%) vs. $186M. Same-store sales down 10.9%. Sees Q3 revenue of $177M-186M vs. $190M. Sees Q3 same-store sales down 6-11%. (PR) Dell (DELL): Q2 EPS of $0.24 beats by $0.01. Revenue of $12.8B (-22%) vs. $12.6B. "We have been reducing complexity in our organization and significantly lowering operating costs," said CEO Michael Dell. If demand trends continue, expects 2H revenue stronger than 1H. "We are expanding our capabilities in enterprise technology and services and investing in our core business." (PR) J Crew Group (JCG): Q2 EPS of $0.29 beats by $0.14. Revenue of $358M (+6%) vs. $347M. Same-store sales down 5%. (PR) Novell (NOVL): FQ3 EPS of $0.07 in-line. Revenue of $216M (-12%) vs. $217M. (PR) Marvell Technology Group (MRVL): Q2 EPS of $0.18 beats by $0.04. Revenue of $641M (-24%) vs. $620M. (PR) MICROS Systems (MCRS): FQ4 EPS of $0.36 beats by $0.04. Revenue of $224M (-13%) vs. $215M. (PR) Solera Holdings (SLH): FQ4 EPS of $0.17 misses by $0.21. Revenue of $144M (-1%) vs. $139M. (PR) Today's MarketsAsia markets were mixed Friday, with moderate gains in Japan offset by hefty losses in Shanghai. Europe markets are up about 1%, and U.S. futures are trading near overnight lows.

  • Will Windows Mobile Play DOS to Apple's iPhone?

    Daniel Eran Dilger Today's broad array of smartphone operating system contenders are offering lots of potential answers to a problem that only requires one. It appears the market has two options ahead: either pool generic hardware makers behind a single operating system and deliver a smartphone marketplace that resembles the Windows PC market, or watch them fall to a dominant leader and have a smartphone market that resembles Apple's iPod ecosystem. This decision isn't going to be made by a class of intellectual elite, or by government mandate. it's going to be made by the market itself. Here are the factors that will influence the outcome, either marginalizing Apple's iPhone into a niche as the company has twice experienced previously at the hands of DOS in 1981 and Windows in 1991, or positioning it as the dominant leader as Apple has achieved for itself with the iPod since 2001. The first segment in this series will look at Windows Mobile as a possible “DOS-attack” against Apple's iPhone. Subsequent segments will look at Google's Android, Nokia's newly opened Symbian, and other mobile contenders challenging the iPhone. Will the iPhone Meet its Match from a Modern Day DOS? This All Happened Before… But Things Have Changed. It's easy to try to predict the future with the help of hindsight. However, while we know history keeps repeating, events always do so in slightly different ways that keep us surprised, as anyone who has tried to salvage fashion and wear it again a generation later has found. In this case, we have two historical events serving as potential foreshadowing events. Which will win out: a DOS model or the iPod model? Windows Enthusiasts had been confidently praying for Microsoft's Windows Media platform to save them from the iPod ever since Apple released its music player. When the PlaysForSure world came crashing down, they rushed to support Microsoft's own solo attempt to compete against the iPod with Zune. Things really got ugly when the iPhone arrived. Meditative prayers for deliverance from the iPod turned into incessant voodoo chanting against the iPhone, accompanied by spirited dancing around the truth and needling attacks. Philip Solis of ABI Research shifted his attention from conducting interviews that suggested a mass Zune migration to issuing reports denying that the iPhone was a smartphone at all by his own definition. Rob Enderle jumped from hopeful optimism for the Zune (“Microsoft is trying to encompass Apple and turn them into a bit player. The strategy is brilliant, but the question is can they execute?”) to angry condemnation of the iPhone, calling it “damned” and “not a good phone” months before he had ever even touched one. Enderle is now serving as a consultant to Dell's plans to resurrect its failed “DJ Ditty,” and offering up opinions on how to compete with the iPod, despite having no experience in guiding companies into competition apart from a long career of cheerleading Microsoft's monopoly position, which was devoid of any functional competitors. Mike Elgan initially wrote that the Zune “scares Apple to the core,” and was confident that Microsoft would “leverage the collective power of Windows XP, Windows Vista, Soapbox (Microsoft’s new ”YouTube killer“) and the Xbox 360” to kill Apple's iPod business. After the Zune failed and the iPhone took off, Elgan complained that Apple was “arrogant” and “the new Microsoft” and needed to be stopped. Since then, Microsoft has canceled XP, Vista has floundered, Soapbox went nowhere, an the Xbox 360 has done nothing to advance Zune sales. Paul Thurrott similarly called iTunes a dangerous monopoly despite the wide open market for iPod alternatives, and warned “Apple should be stopped before the abuses get too great and harm too many consumers.” However, Thurrott himself has chosen to bravely negotiate those dangers and use iTunes, iPods, the iPhone, and pays for MobileMe. He celebrates his use of Apple products in front of Mac users, and then bad mouths them in his Windows-oriented blogs. Lately he has been increasingly unable to find anything good to say about the Zune or Windows Mobile either, however. More Absurd iPhone Myths: Third Party Software Panic Mac OS X vs Linux: Third Party Software and Security Arrogance Unleashed: The Foul Stench of Computerworld’s Mike Elgan Forrester Research: Epic Terror of iTunes and Apple TV Windows Mobile is Not the DOS You're Looking For. Even the most devoted, hardcore fans of the Zune and Windows Mobile are having a hard time praising their current incarnations. The next version of each, both of which promise to address their huge gap in functionality compared to the iPhone and iPod touch, is scheduled for late 2009 or 2010. That is an eternity away, particularly considering that the iPhone went from rumor to 2.0 over the same period of time. A year and a half from now, the iPhone will be splitting atoms and curing cancer (so to speak). While Apple has received some appropriate criticism for releasing iPhone 2.0 with considerably less stability and polish than the original iPhone 1.x software, updates improving the situation have been released regularly, with two just in the last month. Windows Mobile users are lucky if they get a minor bug fix once a year, and many users have to wait months after an update is released before their hardware manufacture or mobile provider approves the update for download. The original iPhone also had some teething problems that were quickly addressed in a series of regular updates over its first six months on the market. In comparison, Windows Mobile has been out for over half a decade. It has not only rarely received updates, but has never performed admirably. It is known for poor battery life, rampant instability, and a poor development architecture that is well behind the iPhone's Cocoa Touch frameworks. Over the last two years, Apple delivered eleven updates to the iPhone OS compared to two from Microsoft, despite the fact that Apple only sold the iPhone over three fourths of that period. Over the next two years, Apple will likely ship another dozen updates while Microsoft only plans to ship one: Windows Mobile 7 DOS Model Problems. In addition to the faults of Windows Mobile that can be directly blamed upon Microsoft, there are also serious flaws within the model for selling a universal operating system across a number of hardware devices. The “DOS model” has demonstrated problems for PC makers, but in a mobile device, those problems have even greater significance. Microsoft is troubled with having to support a wide range of Windows Mobile phones that all support different features. PDA-style “Pocket PC” Windows Mobile devices use a larger stylus tap screen, while “Windows Mobile Smartphones” such as the Motorola Q, only provide a tiny screen with no touchscreen capacity. Also, only a few Windows Mobile phones have an accelerometer, or WiFi, or GPS, and the camera in each is unique. These hardware differences complicate developers' ability to release software that takes advantage of the features of each phone appropriately. Should a game provide accelerometer controls that only work on a few Windows Mobile phones? Should a document viewer application attempt to take advantage of a larger, interactive tap screen or try to cram into a tiny screen driven only by hardware buttons? The iPhone has one screen interface and a single set of hardware features for developers to target. While new iPhone models will eventually broaden those features, Apple will be managing the transition, and has the power to deliver software that abstracts different abilities seamlessly, just as it has on the Mac. For example, location services on the iPhone 3G works identically to those on the original iPhone apart from lacking GPS, and the iPod touch works the same way despite only being able to use WiFi to find its location. Developers don't have write to a specific profile, they simply ask the device for a location and the software uses the hardware available. Supporting devices from different manufactures all trying to differentiate themselves is simply far more difficult. Wait, Stop, Come Back. Microsoft's core inability to deliver a decent mobile operating system after a decade of trying, on top of the fact that supporting a wide variety of hardware is simply more difficult to pull off compared to Apple's integrated model, makes it simply hard to make the case that Microsoft will float out a third generic platform to overtake the smartphone industry following its DOS and Windows for the PC, both of which were actually more the product of fortunate positioning and existing market power. In reality, while Microsoft talks up its plans to take over the smartphone market, Windows Mobile has been dramatically losing market share among smartphones despite having taken over the software reigns at Palm and snuffing out the Palm OS to take its position as heir to the Treo dynasty. The Windows desktop monopoly has done nothing to shore up Windows Mobile's declining market share, which according to Canalys has slipped from 23% in 2004 to around 12% today. Instead, Apple rose to match and then exceed Microsoft's market share among smartphones in the US within just three months of sales. It not only maintained its lead in the US, but with the release of the iPhone 3G appears to have caught up to Microsoft's entire worldwide shipments across all of its providers in its first weeks on going on sale. Microsoft’s Zune, Vista, and Windows Mobile 7 Strategy vs the iPhone DOS and Windows Then… When Apple released its Macintosh in 1984, the IBM DOS PC had already captivated the market and was widely established. The majority of PCs being sold had already migrated away from CP/M and other DOS competitors, leaving Apple to compete against a strongly entrenched platform led by the much larger IBM, which had monopolized business machines for decades prior to entering the new personal computing market. Apple also had a severe price premium to overcome when selling against DOS PCs (most of which were sold with a fraction of the RAM or graphics capabilities of the Mac), and Apple itself was doing a poor job of marketing the Mac, with CEO John Sculley choosing to promote “Apple II forever” while Jean-Luis GassĂ©e pulled plans to push Macs in business and targeted the high end desktop publishing niche instead. When Microsoft began successfully promoting Windows in 1991, it was selling to that same DOS PC audience, which had only become further entrenched over the last eight years. The Mac was already hammered into a tight niche and Apple had done little to advance its technological lead over the PC. On top of all that, Apple had handed Microsoft a wide open license to use its Mac interface conventions, and then embroiled itself in unsuccessful litigation to undo the damage. By the time Windows began shipping broadly, Sculley was focused on his political career while GassĂ©e was getting ready to start his own company. Mac Office, $150 Million, and the Story Nobody Covered Jean-Louis GassĂ©e Returns from Obscurity… to Talk About MobileMe … and the iPhone Now. Today, the circumstances are wildly different. Windows Mobile does not enjoy any dominant position in the US (where RIM is far ahead) or worldwide (where Nokia is leading by a dramatic margin). Competition between Windows Mobile and other alternatives has left Microsoft's product looking unattractive outside of a few niche markets among Microsoft IT shops, many of whom are now considering the iPhone instead. The iPhone has broad appeal leveraging Apple's iPod, Mac, and retail store successes. Apple is actually marketing its products effectively now through its own retail stores. AT&T and other mobile partners are also working to sell the iPhone because it generates more money for them; ten years ago, Apple could barely get retailers to stock its products, let alone market them. Not only are Apple's sales outpacing those of Windows Mobile devices, but users are now browsing the web four times more frequently from the iPhone than from Windows Mobile. Apple not only has a huge mindshare and technical lead, but has a co-development platform spanning the Mac desktop and the iPod touch handheld that shares technology with the iPhone. While Microsoft sells some Pocket PC PDAs lacking mobile service that are not counted in its smartphone market share, Apple sells a vast number of iPod touch devices that likely outnumber sales of the iPhone by a wide margin, and those are similarly not counted in Apple's smartphone market share. Considering the entire WinCE platform, which includes Windows Mobile Smartphones, Pocket PC (mobile and non-mobile), Zune, and other PlaysForSure licensed Portable Media Center devices, Microsoft's influence over handheld devices is insignificant compared to Apple's with the iPod and iPhone, despite the fact that the iPhone and the iPod touch are barely a year old. In the US, where Apple sold the majority of its iPhones in 2007, it outflanked all Windows Mobile sales in its first quarter of sales. A Better DOS than MS-DOS. Who will pick up the torch Microsoft has dropped? The most likely contender may be Google's Android. Microsoft's leading Windows Mobile partner HTC certainly thinks so, as it is hedging its bets to become a member of Android's Open Handset Alliance. Can Android play DOS to the iPhone for commodity smartphone hardware manufacturers, and will Google end up with a Microsoft-like role among phone makers? The next article will take a look. Did you like this article? Let me know. Comment here, in the Forum, or email me with your ideas. Like reading RoughlyDrafted? Share articles with your friends, link from your blog, and subscribe to my podcast (oh wait, I have to fix that first). It's also cool to submit my articles to Digg, Reddit, or Slashdot where more people will see them. Consider making a small donation supporting this site. Thanks!

  • Apple's iPhone will sour consumer Blackberry results

    I have been reading through the recent Research In Motion (RIM, ticker symbol RIMM) earnings call transcript on Seeking Alpha over the weekend, and a few data points jumped out at me:RIM has sold a total of 20 million Blackberries to date and has more than 11 million Blackberry service subscribers. The word Blackberry is now synonymous with smartphone, and may be even more well-known than the generic term. But based on the subscriber numbers, Blackberry subscribers only account for about 1% of total mobile phone sales per year. And the total of 20 million Blackberries sold put RIM's installed base market share at less than 2%. That's a lot of market influence for a very small community.RIM sells through 325 carriers world-wide. Just maintaining 325 carrier relationships, each with their own demands for special features, products, and services, must put incredible strain on a $3.5 billion annual revenue company. RIM is expecting 50% of its North American sales to come from outside the enterprise. Corporations distribute Blackberries in much the same way as they do Windows PCs, and that business distribution channel has demanded features such as encrypted transmission, no cameras in handsets, and remote wiping of handsets. Yet, the company is expecting to sell half of its upcoming phones to consumers, who have very different buying criteria.Now, conventional Wall Street wisdom has been that the launch of Apple's iPhone has been good for RIM because it has raised consumer demand for smartphones. It certainly has been good for its stock price, which has risen more than 160% this year and now sports a trailing earnings P/E of 89. And in fact, when asked about the new competition from other new consumer-focused handsets, RIM had this quite long reply:Well, it’s a very good question and we try to think of these things as a system. At the core, we think of the devices as the presentation terminal. It’s got IO packaging and it requires a -- you know, and the principal focus is balancing richness and efficiency and scarcity. And then you need a synchronization engine because people view these as network appliances that synchronize generally to a distributed set of server stores in their life.And then the third thing is you need a channel relationship or you need a direct relationship where the carrier is prepared to be simply a data pipe. And so our view of it is strategically, we endeavor to evolve carriers’ relationships with voice customers to platform relationships on an OEM relationships with BlackBerry, which is the synchronization engine, as I mentioned, in the three different areas that we synchronize to.Of course, we have a rich channel relationship with them and a comprehensive synchronization capability, and that is to work in harmony with the devices. The devices are not in isolation. So as the transports get richer, as the back-end stores people want to connect to proliferate, and as the kind of applications people want evolve, of course it creates tremendous opportunities to innovate on the device side.Things like YouTube video weren’t even concepts not a long period of time ago. Even the synchronization of an MP3 from a PC store is a relatively new concept in the hardware world, and then the fact that it’s just a software op on a cell phone is much, much newer. And then you look at the fixed mobile convergence, you look at new user input things where people want a lot of screen real estate with the ability to evolve it to varying forms of input -- you know, there’s a tremendous amount of innovation on there.But the key is is the efficiency platform of the device and the performance of the synchronization engine and the alignment of the carrier channel in our world are preconditions. And then absolutely a rapidly emerging dimension of innovation is the IO packaging, and that is something we absolutely do well in and we are innovating and we are driving and we have lots of exciting demands and lots of exciting partnerships, but it’s always looked at in a system service, efficiency and channel relationship context.Chasing pretty packaging is not really what drives us, but that being said, exciting forms of multimedia IO and form factors the complement all the different services that people want and offer in wireless, it’s absolutely a big, big part of our business and it’s hard not to get excited by larger and addressable markets and compelling services and the kind of things that people are prepared to pay more money for to the carriers and churn less.Did you understand that? I didn't. And frankly, I'm not surprised. Because I don't think RIM can articulate why consumers should buy their phones And when faced with a choice between Apple's iPhone and RIM's Blackberry, consumers will increasingly choose Apple, not RIM.Why do I think this? Here are four reasons:RIM sold only 2.5 times as many phones as Apple, a company that had never sold a phone before. We estimate that Apple sold about 1.25 million iPhones in this quarter, while RIM sold 3.1 million. And Apple did this with exactly two iPhone products, compared with RIM's 12 or more. Further, Apple didn't have 3G, secure transmission, GPS, and countless other features RIM notes as being critical to its business. When an upstart can sell 1/3 as much product as the market leader in a category, it means that market is changing in a big way.RIM sold through 325 carriers, Apple through one. RIM isn't getting much advantage from selling through so many carriers, when it averages only 10,000 phones sales per carrier a quarter. Yet each carrier relationship requires time, effort, and money to maintain and pulls RIM in 325 directions. Apple will undoubtedly work with more carriers over time, but I suspect they will be more selective in their carrier relationships, and, gasp, might even require that each relationship demonstrably contribute to its business results.RIM has overestimated its ability to connect with consumers. RIM is going after consumers with similar products and features it has used to capture enterprise customers. But consumers aren't businesses, and they buy on more than just features. And expecting 50% of your new business to come from an unproven customer base just doesn't make any sense, no matter how smart and accomplished your company is.RIM has spread itself too thin. RIM is offering 12 different models of phones today, and has more to come. That means that choosing a RIM product becomes a complicated analysis for consumers of which products are best for each application. Yet, RIM must build, stock, and support each of those products for its channels, regardless of how they sell. Apple, on the other hand, reduced its iPhone models from 2 to 1 last month to make choosing its product even easier -- and to improve its business performance. Apple so far is putting all its effort behind one carefully crafted iPhone arrow, while RIM is weighted down by a heavy quiver of Blackberry Curves, Pearls, 8800s, 7200s, and 7100s.Wayne Gretsky, Canadian hockey great, claimed, "I skate to where the puck is going to be, not where it has been." RIM is still skating toward the old mobile phone business model, where businesses and carriers dictated standards and devices. But with Apple's focus and strategic marketing, it is skating to where the mobile phone puck is going in the next several years, where no-muss, no-fuss direct-to-consumer relationships will eclipse those carrier and business-driven "we know what's best" device models. And unless RIM can do a better job of articulating why its products are better for consumers than it did in the earnings call, it's going to be Apple, not RIM, who will be racking up the goals. And with RIM boasting revenue of $3.5 billion compared with Apple's $22.6 billion, even any loss of market share to Apple will hurt RIM's stock price more than it would Apple's -- a lot more.Technorati Tags: Apple, Blackberry, iPhone, Marketing, Mobile phone, Research in Motion

  • Wall Street Breakfast: Must-Know News

    Stress tests may reveal banks' capital needs. As the May 4 reveal date for stress tests draws closer, officials are considering releasing assessments for each of the 19 banks and may require those that need more capital to disclose how they plan to raise additional funds. Under that scenario, lenders would have to specify whether they want to convert government preference shares, issue more stock or rely on an additional bailout. The push for disclosure is meant to help the public better discern between the health of individual banks. Sources say regulators want the banks to have at least 3% tangible common equity. Lewis: Fed, Treasury urged Merrill silence. According to a recently obtained copy of CEO Ken Lewis' February testimony to New York's attorney general, Bernanke and then-Treasury chief Paulson pressured Bank of America (BAC) to stay silent on its increasingly troubled deal to acquire Merrill Lynch. Despite an obligation to disclose any material financial hits to shareholders, officials pressed Lewis to keep quiet during government-funding negotiations to ensure important financial institutions wouldn't fail. Publicizing Merrill's losses would have allowed Bank of America's shareholders the opportunity to stop the deal and let Merrill collapse. Counter-counter-offer on Chrysler debt. After rejecting a too-rich counter-offer from Chrysler creditors, the Treasury has reportedly raised its own offer in an effort to reach a deal with lenders by the end of the month. The new deal would see lenders get $1.5B of first-lien debt and a 5% equity stake in a restructured Chrysler in exchange for the $6.9B of debt they now hold. The Treasury had previously suggested lenders write off all but $1B of the debt and receive no stock. GM to miss debt payment, idle plants. Trying to avoid bankruptcy ahead of the government's June 1 deadline, General Motors (GM) may rush to close dealerships, scrap models and could idle most of its plants for around two months this summer. The moves could help GM break even with annual sales as low as 10M vehicles. Meanwhile, CFO Ray Young said the company doesn't plan to pay off $1B of debt due June 1, and will instead swap the debt for shares or rely on bankruptcy protection. The tougher public stance towards bondholders is meant to lay the groundwork for what promises to be an ugly debt-for-equity swap GM expects to launch by next week. Hard times for Hartford. Hartford Financial Services (HIG) is said to be seeking bids from rivals including Travelers Companies (TRV) for its flagship property insurance business. Sources said Hartford has been shopping the unit after losses in its life division led to credit downgrades, and that damage from the financial crisis may ultimately lead to a breakup of the insurer. The property unit is estimated to be worth $4B-$8B. Obama meets with credit card chiefs. Obama will meet with executives from the credit card industry today, one day after a congressional panel approved legislation to curb credit card fees and limit consumer penalties. The American Bankers Association is concerned such restrictions will tighten the availability of consumer credit and make it more expensive. Bank of America (BAC), American Express (AXP), Citigroup (C), Wells Fargo (WFC), JPMorgan Chase (JPM), Capital One (COF), Visa (V) and Mastercard (MA) will be among the 13 companies represented. NY cracks down on pension agents. New York State's public pension fund will ban the use of middlemen who help private-equity funds and other investors secure its business. The state is investigating whether these middlemen, called placement agents, were involved in a scheme to receive illegal payments from firms trying to win state business. As one of the nation's largest public pension funds, New York's decision could prompt other states to follow suit. Morgan mulls TARP repayment. Despite reporting a larger-than-expected quarterly loss, Morgan Stanley (MS) CFO Colm Kelleher said the company will 'consider' repaying $10B to the government. The statement comes less than a month after CEO John Mack told employees 'it's the wrong time' to return the money. Morgan Stanley had a Tier 1 ratio of 16.4% at the end of March, or 12.9% if the bank repays TARP funds. Shares +2.9% premarket (7:00 ET). Credit Suisse profit beat. Credit Suisse (CS) posted a better-than-expected Q1 profit, bouncing back from several quarterly losses in 2008. The bank saw a net profit of 2B Swiss francs ($1.72B), more than double analysts' forecasts. Though short on details for its 2009 outlook, the bank said it is "in a position to weather the storms and perform well when market opportunities arise." Shares +10.5% premarket (7:00 ET). Apple shines on iPhone sales. Apple's (AAPL) quarterly earnings easily beat consensus estimates (see details below) as strong sales of iPods and iPhones held up despite the weak economy. Profit was also helped by declining commodity prices for key product components like aluminum and memory chips. This was the company's first quarter since CEO Steve Jobs went on medical leave. eBay gets okay on Gmarket buy. eBay (EBAY) won regulatory approval from South Korea's antitrust watchdog to proceed with its planned purchase of Gmarket (GMKT). A majority of Gmarket shareholders have already agreed to the cash tender offer. Glaxo to release study after long delay. GlaxoSmithKline (GSK) will release the first study comparing its cervical cancer vaccine with Merck's (MRK) blockbuster Gardasil at a May 10 medical meeting. The fact that the results are being released 14 months after the study concluded and at a relatively unknown meeting have left investors and analysts puzzled. Freddie CFO takes his own life. Acting CFO of Freddie Mac (FRE) David Kellerman was found dead in his home in what appears to be a suicide. Kellerman had worked at the mortgage giant for 16 years. House prices rise slightly (.pdf). FHFA's House Price Index showed U.S. home prices rose 0.7% in February M/M, bringing the twelve-month total to -6.5%. January's previously reported 1.7% gain was revised down to 1.0%. Earnings: Thursday Before Open AmerisourceBergen (ABC): FQ2 EPS of $0.95 beats by $0.06. Revenue of $17.31B (-2.5%) vs. $17.93B. Sees full-year EPS of $3.18-3.30 vs. $3.19. (PR) Alexion Pharmaceuticals (ALXN): Q1 EPS of $0.16 beats by $0.02. Revenue of $81M (+78.7%) vs. $82M. (PR) AU Optronics (AUO): Q1 EPS of -$0.71 misses by $0.04. Revenue of $1.5B (-66.7%) in-line. Expects utilization rates to improve substantially in Q2. (PR) AutoNation (AN): Q1 EPS of $0.23 beats by $0.07. Revenue of $2.47B (-35.6%) vs. $2.74B. Says it reduced debt by $500M in Q1, and remains in compliance with all debt covenants. Sees sales improving in H2. (PR) Black & Decker (BDK): Q1 EPS of $0.22 beats by $0.14. Revenue of $1.07B (-28.2%) vs. $1.16B. Sees full-year EPS of $1.50-1.90 vs. consensus of $1.79. (PR) Bunge (BG): Q1 EPS of -$1.76 misses by $2.25. Revenue of $9.2B (-26.2%) vs. $11B. (PR) Canadian Pacific Railway (CP): Q1 EPS of C$0.39 misses by C$0.09. Revenue of C$1.07B (-6.6%) vs. C$1.04B. "The unprecedented temporary decline in traffic in some of our key markets (as measured by carloads), particularly potash (-70%), Canadian coal (-30%), and automotive (-43%) has resulted in more than 2,400 employee layoffs to date." (PR) Celestica (CLS): Q1 EPS of $0.13 beats by $0.04. Revenue of $1.47B (-20%) vs. $1.51B. Q2 guidance in line. (PR) CIT Group (CIT): Q1 EPS of -$1.30 misses by $0.84. Tier-1 capital ration 9.3%. (PR) CME Group (CME): Q1 EPS of $3.20 in-line. Revenue of $647M (+3.5%) vs. $656M. Average rate per contract increased 12% to $0.83. (PR) ConocoPhillips (COP): Q1 EPS of $0.56 beats by $0.14. Revenue of $30.7B (-44.1%) vs. $26.34B. Shares +4.3% premarket. (PR) CONSOL Energy (CNX): Q1 EPS of $1.08 beats by $0.15. Revenue of $1.22B (+18.8%) in-line. "Energy companies with less than stellar financial positions could find it very difficult to obtain reasonable financing terms to maintain their operations. We believe that this will impact supply and could set the stage for higher coal and natural gas prices as early as '10." Shares +3.5% premarket. (PR) Cooper Industries (CBE): Q1 EPS of $0.47 beats by $0.01. Revenue of $1.26B (-18.7%) vs. $1.32B. Sees Q2 EPS of $0.50-0.60 vs. $0.60 and full-year EPS of $2.30-2.60 vs. $2.40. (PR) Danaher (DHR): Q1 EPS of $0.72 misses by $0.01. Revenue of $2.63B (-13.2%) vs. $2.67B. (PR) Diamond Offshore Drilling (DO): Q1 EPS of $2.51 beats by $0.29. Revenue of $886M (+12.7%) vs. $878.5M. (PR) EMC (EMC): Q1 EPS of $0.16 in-line. Revenue of $3.15B (-9.2%) vs. $3.25B. Sees global IT spending down in the low-double-digits for 2009. Expects $450M in cost reductions, up from a previous estimate of $350M, but says margins will decline due to weaker IT spending. (PR) ENSCO International (ESV): Q1 EPS of $1.56 beats by $0.04. Revenue of $514M (-9.6%) in-line. (PR) Exelon (EXC): Q1 EPS of $1.20 beats by $0.07. Revenue of $4.75B (+3.6%) vs. $4.62B. Reaffirms full-year EPS guidance. Shares +0.4% premarket. (PR) Fifth Third Bancorp (FITB): Q1 EPS of -$0.04 beats by $0.23. Tier 1 capital ratio of 10.9%. Tangible equity ratio of 7.9%. (PR) Goodrich (GR): Q1 EPS of $1.35 beats by $0.28. Revenue of $1.7B (-2.8%) in-line. Sees full-year EPS of $4.50-4.75 vs. $4.63, and revenue of $6.9B vs. $7.1B consensus. (PR) Hershey Foods (HSY): Q1 EPS of $0.38 beats by $0.03. Revenue of $1.24B (+6.5%) vs. $1.19B. Reaffirms 2009 net sales growth of 2-3%. Sees EPS increasing at less than its long-term objective of 6-8%. (PR) JetBlue Airways (JBLU): Q1 EPS of $0.08 beats by $0.05. Revenue of $793M (-2.8%) vs. $810M. Operating margin of 9.3% vs. 2.2% a year ago. First profitable Q1 since 2005. Shares +9.9% premarket. (PR) L-3 Communications (LLL): Q1 EPS of $1.66 beats by $0.03. Revenue of $3.64B (+3.7%) in-line. Reaffirms full-year guidance. (PR) Logitech (LOGI): FQ4 EPS of -$0.20 misses by $0.26. Revenue of $408M vs. $496M. Gross margin fell to 25% from 35.6% last quarter. "Our sales were negatively impacted by the combination of weak consumer demand and the accelerating reset by our channel partners of their weeks of supply." Shares -11.3% premarket. (PR) Marriott International (MAR): Q1 EPS of $0.24 beats by $0.10. Revenue of $2.5B (-14.8%) in-line. Issues downside EPS guidance for Q2 of $0.20-0.23 vs. $0.26 consensus. Maintains guidance for FY '09 of $0.88-1.02 EPS. (PR) Marshall & Ilsley (MI): Q1 EPS of -$0.44 misses by $0.11. Revenue of $M in-line. Q1 loan-loss provision of $478M. Shares +5.6% premarket. (PR) National-Oilwell Varco (NOV): Q1 EPS of $1.13 beats by $0.07. Revenue of $3.48B (+29.6%) vs. $3.29B. "Though the pace of new capital equipment orders has slowed in the short run, we believe investment in drilling equipment will resume, to enable the industry to explore new oil and gas frontiers. Nevertheless market conditions remain very challenging, and the timing of a recovery is uncertain." Shares -4.4% premarket. (PR) NII Holdings (NIHD): Q1 EPS of $0.43 beats by $0.07. Revenue of $M (+961%) in-line. Shares +2.3% premarket. (PR) Novartis (NVS): Q1 earnings of $1.96B ($0.87/share) vs. consensus of $1.89B. Sales fell 2% to $9.71B. Sees drug sales up mid-to-high single-digits. Shares +4.7% premarket. (Bloomberg) Occidental Petroleum (OXY): Q1 EPS of $0.50 beats by $0.13. Revenue of $3.07B (-49%) vs. $3.18B. Production was up almost 8% in Q1. (PR) Philip Morris (PM): Q1 EPS of $0.74 beats by $0.05. Revenue of $5.6B (-5.5%) vs. $5.48B. Reaffirms full-year guidance of $2.85-3.00 vs. consensus of $3.02. (PR) PNC Financial Services (PNC): Q1 EPS of $1.03 beats by $0.61. Revenue of $3.9B (+112.6%) vs. $3.5B. (PR) Potash (POT): Q1 EPS of $1.02 beats by $0.16. Revenue of $922.5M (-51.2%) vs. $975.5M. Issues downside EPS guidance for Q2 of $1.10-$1.50 vs. $2.21 consensus, and FY '09 EPS of $7.00-$8.00 vs. $9.65. (PR) RadioShack (RSH): Q1 EPS of $0.34 beats by $0.12. Revenue of $1B (+5.6%) vs. $0.94B. Comps were up 5% vs. Q1 2008. (PR) Raytheon (RTN): Q1 EPS of $1.11 beats by $0.10. Revenue of $5.88B (+9.9%) vs. $5.6B. Full-year guidance in line. Shares +2.4% premarket. (PR) Royal Caribbean Cruises (RCL): Q1 EPS of -$0.17 beats by $0.17. Revenue of $1.33B (-7.2%) in-line. Sees full-year EPS of $1.35 vs. consensus of $0.97. Shares +13.5% premarket. (PR) Sigma-Aldrich (SIAL): Q1 EPS of $0.68 beats by $0.04. Revenue of $519M (-8.8%) vs. $532M. Full-year guidance in line. (PR) Suncor Energy (SU): Q1 EPS of $0.24 beats by $0.12. The decrease in earnings was primarily from lower price realizations, with benchmark commodity prices significantly weaker in Q1 '09 vs. Q1 '08. (PR) SunTrust Banks (STI): Q1 EPS of -$0.46 beats by $0.19. Revenue of $2.24B (+16.3%) vs. $2.06B. Majority of loss was due to a $715M goodwill impairment charge. Tier-1 ratio estimated at 11%, up 13 points from last quarter. (PR) Supervalu (SVU): FQ4 EPS of $0.87 beats by $0.08. Revenue of $10.82B (+4.2%) in-line. (PR) Thermo Fisher (TMO): Q1 EPS of $0.62 misses by $0.08. Revenue of $2.26B vs. $2.42B. Sees full-year EPS of $2.80-3.10 vs. $3.15, and revenue of $9.6-9.9B vs. $10.14B. "Our customers are clearly delaying their capital purchases in the current environment." Shares -7.6% premarket. (PR) Union Pacific (UNP): Q1 EPS of $0.72. beats by $0.06. Revenue of $3.42B (-20%) vs. $3.55B. "The difficult economic conditions continue to affect our business volumes. During this challenging time, we are reducing costs across the board..." Shares +2.7% premarket. (PR) UPS (UPS): Q1 EPS of $0.52 misses by $0.04. Revenue of $10.94B (-13.7%) vs. $11.44B. Sees Q2 EPS of 0.45-0.55 vs. consensus of $0.65. "Economic indicators tell us recovery in the U.S. might begin late this year, but more likely not until 2010." Shares -3.7% premarket. (PR) US Airways (LCC): Q1 EPS of -$2.28 beats by $0.10. Revenue of $2.46B (-13.6%) in-line. "Our first quarter loss reflects the weakness in the global economy that has negatively impacted revenues throughout our industry. The steps we have taken to adapt to this environment are having a significant positive impact, though, as evidenced by our significant improvement in earnings excluding special items and fuel hedges." Shares +6% premarket. (PR) Zimmer (ZMH): Q1 EPS of $0.95 beats by $0.01. Revenue of $993M (-6.3%) vs. $1B. Sees full-year EPS of $3.85-4.00 vs. $3.88. (PR) Earnings: Wednesday After Close Apple (AAPL): FQ2 EPS of $1.33 beats by $0.24. Revenue of $8.16B vs. $7.96B. Sees FQ3 EPS of $0.95-1.00 vs. consensus of $1.12, and revenue of $7.7-7.9B vs. $8.28B. Mac sales of 2.22M (-3% Y/Y). iPod sales 11M (+3%). iPhone sales 3.79M (+123%). (PR) Alliance Data Systems (ADS): Q1 EPS of $1.19 beats by $0.09. Revenue of $480M (-3.8%) vs. $488M. Sees Q2 EPS of $1.05 vs. $1.22. (PR) eBay (EBAY): Q1 EPS of $0.39 beats by $0.05. Revenue of $2.02B (-7.8%) vs. $1.94B. (PR) Equifax (EFX): Q1 EPS of $0.58 beats by $0.04. Revenue of $453M (-10%) vs. $448M. (PR) F5 Networks (FFIV): FQ2 EPS of $0.38 in-line. Revenue of $154M (-3.1%) in-line. Says Feb. sales were particularly slow, but March improved significantly. (PR) Leggett & Platt (LEG): Q1 EPS of $0.06 misses by $0.01. Revenue of $718M (-28.1%) vs. $807M. Sees full-year EPS of $0.60-0.90 vs. $0.72, and revenue of $2.9-3.3B vs. $3.39B. (PR) Lam Research (LRCX): FQ3 EPS of -$0.71 misses by $0.05. Revenue of $174.4M (-71.6%) vs. $175.9M. (PR) Noble (NE): Q1 EPS of $1.62 beats by $0.16. Revenue of $896M (+4%) in-line. (PR) Novellus Systems (NVLS): Q1 EPS of -$0.47 beats by $0.04. Revenue of $98.9M (-68.6%) vs. $101.7M. Says it's cautiously optimistic order activity has stabilized. (PR) Pactiv (PTV): Q1 EPS of $0.69 beats by $0.23. Revenue of $766M (-5.2%) vs. $732.5M. Sees Q2 EPS of $0.54-0.58 vs. $0.51 and full-year EPS of $2.15-2.25 vs. $1.89. "Compared with the first quarter of last year, we benefited from lower raw material costs, as well as lower logistics costs, and improved productivity." (PR) Robert Half International (RHI): Q1 EPS of $0.06 in-line. Revenue of $823M (-32.8%) vs. $844M. (PR) SLM Corp. (SLM): Q1 EPS of -$0.03 vs. consensus of $0.12. Loss was partly the result of ongoing dislocation in the commercial paper market. (PR) VMware (VMW): Q1 EPS of $0.25 beats by $0.05. Revenue of $470M vs. $474M. Sees Q2 revenue flat to down vs. a year ago. (PR) Xilinx (XLNX): FQ4 EPS of $0.26 beats by $0.08. Revenue of $395M (-17%) vs. $383M. (PR) Yum! Brands (YUM): Q1 EPS of $0.48 beats by $0.08. Revenue of $2.22B (-8.1%) vs. $2.33B. Sees full-year EPS of $2.10 vs. $2.08. Says Q2 likely to be its most challenging quarter. (PR) Today's MarketsOverseas markets moved higher Thursday, giving a boost to futures.

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