Earlier this morning, Nokia announced its quarterly earnings, and the analysts celebrated the fact that the Finnish giant sold 91.1 million phones, putting some serious distance between itself and the beleaguered Motorola. That’s a gain of 21 percent when compared with the first quarter of 2006. And yet, the profits declined by 6.6%, as the new phone sales came from emerging markets where people prefer budget phones, and not the multimedia computers.
Similarly, Seagate, the Scotts Valley, Calif.-based disk drive maker saw its revenues grow, but profits tanked. “Seagate just delivered the industry’s first $3 billion quarter, and 30% growth over our year-ago quarter,” said Bill Watkins, Seagate’s chief executive officer. And yet the profits declined 22 percent.
Do you think that this peculiar problem of plenty – where the market share growth isn’t translating into profits – is peculiar to Nokia and Seagate or do you think this is a more widespread malaise?