Nokia - Samsung - Market share rises

Motorola Set To Gain Handset Market Share Ed Lin, 08.16.05, 2:54 PM ET
UBS Investment Research raised estimates on Motorola (nyse: MOT - news - people ), noting that handset volume upside "continues to be driven by higher-then-expected net subscriber additions, particularly in emerging markets." UBS continues to believe that scale will play an increasingly important factor in the industry, "as those without sufficient scale will struggle to keep up with the increasing numbers of required product launches and investment levels to succeed in this environment."
The research firm estimates that the top five vendors--Nokia (nyse: NOK - news - people ), Motorola, Samsung, LG Electronics and the joint venture of Sony (nyse: SNE - news - people ) and Ericsson (nasdaq: ERICY - news - people )--in total will grow share to 80% in 2006 from 70% in 2003.
"We believe Nokia, Motorola and Samsung will be the main winners as all of them have material scale advantages over their competitors," UBS said. The firm increased Motorola's 2006 handset estimate to 156 million from 146 million, citing upward revisions to global handset forecasts, expectations for more consolidation in the handset industry, and "our belief in Motorola's ability to gain additional market share." UBS left Motorola's 2005 earnings-per-share estimate at $1.07 per share, but raised the 2006 estimate to $1.24 per share from $1.20 to reflect increased handset unit forecasts. The firm raised Motorola's price target to $27 from $24. "We believe Motorola's strong balance sheet, product portfolio, and opportunity for market share gains and margin expansion (through initiatives such as supply chain rationalization) should allow for a modest premium to the market multiple," UBS said.