Is Sprint’s Future Questionable?

Sprint Nextel Corp’s shares fell sharply on Thursday as heavy subscriber losses in the second quarter called into question the strategy and outlook of the No. 3 U.S. wireless company.

Sprint had spent heavily to promote its service and better compete against larger carriers Verizon Wireless and AT&T Inc. But that strategy backfired as profit margins eroded and customer losses persisted.

The weak results overshadowed Sprint’s announcement of a $9 billion network contract with start-up LightSquared, and sent the stock tumbling to its lowest point since February before recovering a little to close down 16 percent.

Investors questioned whether Sprint would be able to meet its 2011 targets after such a disappointing showing.

“Their cost of doing business went up dramatically,” said Piper Jaffray analyst Christopher Larsen. “People have less confidence they can meet expectations.”

Sprint’s operating profit margin of 16.3 percent was well below the average Wall Street estimate of around 19 percent as the company had changed its product rebate terms in an effort to combat Verizon Wireless’ sale of the Apple Inc iPhone, and an iPhone discount at AT&T.

But the bet did not pay off as Sprint still saw defections of 101,000 net subscribers — also known as post-paid customers — compared with analysts’ expectation for losses of 15,000.

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Alibaba Debuts Smartphone Running Its Cloud OS

Alibaba Group unveiled its first self-developed mobile operating system and smartphone on Thursday in a bid to capture a slice of China’s burgeoning mobile Internet market.

The cloud computing-based operating system, Aliyun, will run the K-Touch Cloud Smartphone, to be launched at the end of July in 10 colors, said Wang Jian, president of Alibaba Cloud Computing, a unit of Alibaba Group.

A tablet PC running the Aliyun OS, which is based on a customized Android system, will also be launched in China by the end of the year, Wang told reporters after a presentation in Beijing.

Handset manufacturer Tianyu will manufacture the K-Touch as well as the tablet, Wang said.

“Mobile users want a more open and convenient mobile OS, one that allows them to truly enjoy all that the Internet has to offer, right in the palm of their hand, and the cloud OS, with its use of cloud-based applications, will provide that,” said.

The Aliyun operating system will feature cloud services such as email, Internet search and support for web-based applications. Users will not be required to download or install applications onto their mobile devices, Wang said.

Alibaba Cloud plans to integrate the operating system with other devices including mobile phones with larger screens and tablet computers in the coming months.

Wang said the company was looking to launch tablet computers running Aliyun by the end of the year.

The company is currently in talks with Qualcomm Inc to develop a lower-end chipset optimized to run Aliyun OS in lower-end mobile phones, Wang said. The K-Touch phones use a high-end chipset from Nvidia Corp for crisp display of intricate games.

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RIM Cuts 11% Of Workforce

BlackBerry maker Research In Motion Ltd plans to slash approximately 11 percent of its workforce to curb costs as it struggles to compete against Apple Inc and Google Inc.

The announcement of 2,000 job cuts on Monday came a month after the Canadian company acknowledged that it would reduce headcount for the first time in a decade.

One analyst said the job cuts were slightly deeper than expected but were key to RIM’s recovery from a slump triggered by product delays and intense competition from Apple’s iPad and iPhone as well as devices powered by Google’s Android software.

RIM’s U.S.-listed stock, already near multi-year lows, was down as much as 2 percent before the market opened. It was trading down 1.8 percent at $27.40 on the Nasdaq
just before the open.

“This is not totally unexpected. I think the size of (the cuts) is a little bit bigger than what they were intimating before,” said Jefferies & Co analyst Peter Misek. “I think this is obviously realigning the cost structure to a new growth, or sales, reality.”

RIM said one-time charges from the job cuts were not included in its outlook for the second quarter or for the full year, and it would explain the financial impact of the cuts when it reports second quarter results on September 15.

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Nokia Had Horrible Quarter

Nokia has just posted very disturbing quarterly results this morning. The European smartphone giant outlook appears to be getting worse and CEO Stephen Elop has acknowledged that things will not turn around overnight.

Elop is reporting that Nokia’s operating profit is down 44 percent since Q1 and sales of mobile devices are down 23 percent consecutively. While the overall sales of mobile phones and smartphones are down, along with average selling prices.

Elop labelled the results as “clearly disappointing” and went on to say that competitive pressures are continuing. He tried to paint a somewhat more positive outlook for the rest of the year, thanks to Nokia’s clear strategy and several major product launches.

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T-Mobile Will Offer Unlimited Data Plans

Wireless telecom firm T-Mobile USA said it will begin offering unlimited data service plans, in a move aimed at snagging customers of bigger rivals Verizon Wireless and AT&T Inc which have discontinued offering such plans.

T-mobile, a unit of Deutsche Telekom AG, said the new plans will become available from July 24. The unlimited plans will be available with a two-year agreement for new and existing customers.

Verizon Wireless, the biggest U.S. mobile provider, said earlier in July it will stop offering unlimited data service plans, meaning higher prices for heavy users of services such as mobile Web surfing.

AT&T had stopped offering unlimited data services last year.

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Mobile Networks Near Capacity

Mobile networks in North America are using 80 percent of capacity, with 36 percent of base stations facing capacity constraints, according to a survey by investment firm Credit Suisse.

Networks in other regions also are more than 50 percent utilized, with the global average at 65 percent, Credit Suisse said after surveying carriers around the world. That level of use matches the average “threshold” rate that would trigger the service providers to start buying more network equipment, the report said. Looking ahead, on average the carriers expected their utilization rate to grow to 70 percent within 12 months.

Credit Suisse used the results to predict new sales by makers of cellular equipment, such as Ericsson, Alcatel-Lucent, Nokia Siemens Networks and Huawei Technologies. But at a certain level, heavy use of a base station can also affect the mobile experience of individual subscribers. The survey found that 23 percent of base stations worldwide had capacity constraints (defined as a utilization rate over 80 percent during busy hours), while 36 percent in North America were under that kind of pressure.

The North American networks were 72 percent utilized two years ago. The region’s carriers expect the rate to ease back down to that point within two years. North American service providers are likely to buy more equipment soon, because having their networks 74 percent filled is the threshold rate in that region, the survey said.

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TI Chip Goes 1080p On Android Devices

Texas Instruments on Tuesday said its OMAP chip had been certified to unlock full 1080p movies from Netflix for Google’s Android 2.3 based devices, which includes smartphones and tablets.

TI’s on-chip security feature, called M-Shield, will be able to decode 1080p high-definition movie streaming from Netflix, stated Fred Cohen, director of the OMAP user experience team at TI. A security layer unlocks the encoded video, which can then be viewed on smartphones and tablets or TV sets connected through an HDMI (high-definition multimedia interface) port.

The purpose of having this technology is to provide end-to-end security for protected video content, Cohen said. Movie studios are making more high-definition 1080p content available and are adamant about protecting their product, which are considered premium content.

The on-chip feature minimizes the ability to copy content, as it is easy to take control of a rooted Android device, Cohen said. It’s easy for users to access memory where the stream is temporarily stored, and then write the movie to another device.

“You have to protect those devices,” Cohen said. “We have implemented a firewall.”

TI’s security technology is to provide a security layer so devices get access to high-definition movies, Cohen said.

Netflix provides different levels of security certification depending on features such as the video quality and resolution, Cohen said. Netflix did not return a request for comment on whether it was streaming 1080p video content to mobile devices, or whether chip makers required certification to unlock secure 1080p content.

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Nokia Slashes Smartphone Prices

Nokia has lowered the price of smartphones across its entire portfolio in an attempt to slow the decline of its share in the higher-end of the cellphone market, two industry sources said on Tuesday.

One of the sources with direct knowledge of Nokia’s pricing said the company’s flagship model, the N8, the multimedia phone C7, as well as the business user-targeted E6, saw the steepest cuts of around 15 percent.

Other price cuts were smaller, both sources said. “There are no very big cuts per model, but the scale — across the portfolio — is unseen for a very, very long time,” said one of the sources, who works at a European telecom operator.

A Nokia spokesman declined to comment on specific prices and said changes were part of its normal business. “It’s business as usual,” he said.

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Samsung Asks ITC To Ban Apple Products

Samsung requested that the U.S. International Trade Commission ban the importation of Apple’s iPhones, iPads and iPods, ratcheting up its fight with Apple.

The filing, dated Tuesday, states Apple’s iPhone, iPod digital music player and iPad tablet infringe on five of Samsung’s patents involving telecommunications standards and user interface inventions.

Samsung also filed a fresh patent lawsuit against Apple in a Delaware federal court on Wednesday.

The complaints are the latest salvo in a growing legal battle between the two electronics giants.

In April, Apple sued Samsung in a California federal court, claiming the South Korean firm’s Galaxy line of mobile phones and tablets “slavishly” copies the iPhone and iPad.

Samsung then countersued in California, and Apple last week filed another lawsuit in South Korea. An Apple spokesman could not be immediately reached on Wednesday.

As well as its own phones and tablets, Samsung manufactures microchips for Apple’s gadgets, a business that brought in about $5.7 billion in revenue for the South Korean company last year.

Before banning the importation of Apple’s popular devices, the ITC would first have to agree to look into Samsung’s allegations, a process that could be quite lengthy.

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Skype Debuts Video Calls For Android

Skype, which is being gobbled up by Microsoft for $8.5 billion, debuted a new service on Thursday allowing users of Android phones to make free video calls to Skype contacts, including those on Apple iPhones.

The company whose name has become synonymous with Internet calling said its updated Android app would initially support video calling on selected HTC and Sony Ericsson Phones, with more devices to follow shortly.

“We are committed to bringing Skype video calling to as many platforms as possible,” Skype’s product and marketing chief Neil Stevens said in a statement.

The move will help makers of phones based on Google’s Android software compete with Apple’s FaceTime video-calling service launched last year for the iPhone and now available on its iPad 2 tablet and Mac computers.

Video calling could also help new Skype owner Microsoft promote its Windows Phone smartphone platform, which it is merging with Nokia’s in an effort to become competitive with Android and Apple.

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