The strength of the pound against the dollar left Symbian's Q1 results looking less impressive than would be justified. However, the company is still losing money and may need to raise more capital. This could prove a crucial point in the company's relationship with leading shareholder Nokia.
Symbian said on 6 May that deliveries of its mobile phone operating systems more than doubled to 2.4m in the first quarter of the year. This was however 13 per cent down on the figure during the seasonally buoyant fourth quarter and the company was not helped by the slide in market share of its principal licensee Nokia.
CEO David Levin said the company had performed in line with expectations. He was encouraged by Symbian's strengthening position in Japan and said that, at the end of the quarter, 30 phones and variants based on Symbian OS were being readied for market by nine licensees.
Symbian is still leaking money and while revenue was 40.2 per cent higher at £8.7m, the operating loss was £5.4m, down from £8.5m. With £16.2m cash left in the bank, the company may need to raise more funds, which helps to explain why Psion sold its 31 per cent stake in Symbian earlier this year to Nokia for £136m.
The figures understate the company's progress as its license fees are quoted in dollars and the currency's fall in value hits a company whose accounts are in pounds sterling. Though it currently only has a tiny market share for high-end phones, Symbian is pinning hopes on version 8.0 of its OS, which enables a phone to operate on just one processor.
Symbian estimates this will reduce the cost of each handset by $25 to $35, enabling makers to penetrate the mid-market.
The big question now is how far other Symbian shareholders are concerned about the prospect of Nokia dominating the company. Once the Psion share sale gets regulatory approval, the other shareholders have the right to buy a pro rata allocation of the shares. If they all do so, Nokia will end up with less than 50 per cent of the company.
Related research: Datamonitor: "MarketWatch: Telecoms - April 2004" (BFTC0981)
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