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Day June 17, 2010

Mobile phone companies consolidate while the smartphone market expands

In Japan’s second cell-phone merger this month, Fujitsu and Toshiba said Thursday they will merge their handset operations … NEC, Casio Computer and Hitachi merged their phone units earlier this month.

via Fujitsu and Toshiba to Merge Cellphone Units – DealBook Blog – NYTimes.com.

Mergers usually happen in a mature industry when there is excess capacity and decreasing growth.  In the mobile phone market we’ve seen several companies disappear or merge over the past decade:

  • Ericsson
  • Sony
  • Alcatel
  • Siemens
  • Casio
  • NEC
  • Hitachi
  • Fujitsu
  • Toshiba
  • Palm
  • Handspring
  • Motorola tried but failed to get itself acquired.

But we’ve just seen forecasts where the smartphone market is growing and is expected to continue growing at 40%. Why is there consolidation in a growing market?

Nokia: Throwing in the towel

“We have long maintained that the company’s ponderous corporate culture would eventually find its footing, but with competitors attacking fiercely at both the low and high end, deterioration in its core European market, and a lengthening timeline for Symbian^3, which may not live up to expectations anyhow, shares will plunge well below recession lows,” he warns.

via Nokia: Charter’s Snyder, Long-Time Bull, Throws In The Towel – Tech Trader Daily – Barrons.com.

But at least Nokia management can take comfort in having a higher P/E ratio than Apple.