Handset firms hit by investors' 3G fears

Handset manufacturers have been hit by falling share prices, and investor concerns over the costs of 3G implementation are getting the blame.

The three biggest handset vendors - Ericsson, Motorola and Nokia - all experienced a significant drop in their share price over the second quarter of 2000, according to research group Dataquest. Motorola and Nokia saw their shares dip by 0.4 per cent on the previous quarter while Ericsson saw its share price fall 1.2 per cent. Dataquest said Ericsson had suffered component shortages after one of its plants was destroyed by fire, but this didn't explain why the drop in share price was uniform for all three. Clive Longbottom, service director at consultancy Quocirca, said the billions invested in the 3G licences have undoubtedly worried shareholders. "The UK operators need to get their invested billions back which will make the handset very expensive to consumers. This has hit the manufacturers where it hurts the most - on their share price," he said. He added that both WAP and Bluetooth have not lived up to customers' expectations and consequently handset brands had suffered. He said: "The demand for WAP has been underwhelming and overhyped. WAP technology has not proved itself to the investors and PDAs have experienced much steadier growth rate than WAP. Bluetooth has had unflattering delays and security problems." Andrew Peck, Marketing Director for mobile Internet consultants, The Smith Group, noted the handsets on the market have been plagued by technological problems "The key issue for the mobile manufacturers will be to get new, bug-free products to market quickly. We saw major supply problems with early WAP phones as manufacturers were simply unable to ramp up production quickly enough to move with the market demand," he said. Nokia, Ericsson and Motorola all refused to comment.