Handset Problems for Sony Ericsson, Probably Company-Specific

3/20 - "Sony Ericsson (SEMC) guidance implies market share declining from 9.2% in Q4 to 7.5% (on a -12% market unit decline, 7.7% on -15%), the lowest since Q2 06. It is conceivable that LG takes the #4 slot from SEMC in Q1...Ericsson shares fell 10% today which seems an over-reaction on this news. But we are still concerned that the Q3 2007 profit warning has not been fully explained. With our fund manager survey still showing downside risk to tech sentiment, we retain our Neutral rating."

"...this quarter certainly offers some negative data points, but we see it as a collection of seasonal and company-specific issues, rather than a major call on consumer demand for handsets. In our view, 2008 will simply prove to have normal seasonality."

"We also think Nokia will not necessarily miss our estimates...we note the strong trends in Emerging Markets, which are supposed to generate essentially all the growth in our handset model this year...Nokia has by far the highest exposure to emerging markets, at two-thirds of total profit contribution and over 70% of units."