Once a handset business starts to slide, there’s no holding onto it, as Alcatel is finding out. Now there are reports that nine months after setting up the TAMP mobile handset joint venture with Chinese consumer electronics manufacturer TCL, Alcatel is reportedly selling its 45% stake in the JV back to its Chinese partner.
In a note on the situation, Julien Grivolas, Analyst at Ovum, comments, “Launched in August 2004, TAMP’s ambition was to become one of the top five mobile handset manufacturers in the world … [but] TAMP has experienced a difficult start with a $33 million loss for 2004. As a consequence, TCL Communication posted a net loss of $28.6 million for 2004 compared to a net profit of $100.5 million in 2003.”
In 2004, TCL Communication sold 10 million handsets out of which 2.5 million units came from the joint venture, Grivolas noted.
“The price for exiting the mobile handset business could seem high for Alcatel. But the loss-making activities coupled with a limited market share worldwide were clearly not appealing.”
Siemens is still looking for an exit strategy from its handset business, following devastating losses at the operating unit.
