This week, Sprint made a splash by finally giving a release date for its much-anticipated Palm Pre, which could be an iPhone challenger. The global economic downturn continued to hit the industry as Toshiba, Nokia and Vodafone all announced grim news related to ongoing economic pressures. On a positive note, the Mexican government dropped a 15 percent import tariff on handsets, allowing LG to stop making devices in its Mexicali, Mexico, facility.
Here’s a recap of some of the week’s news.
• Sprint’s much-anticipated Palm Pre finally got a launch date after months of industry buzz. The potential iPhone challenger will be released on June 6, debuting for $199.99 with a $100 mail-in rebate and the purchase of a two-year service agreement. Sprint claims its Everything Data plans will offer savings of up to $1,430 over two years versus comparable AT&T and Verizon Wireless plans for smartphones and PDAs. However, a report from UBS Investment said the comparable plans from AT&T may be a bit closer to Sprint’s than the company claims.
• LG Electronics plans to shut down handset manufacturing in Mexicali, Mexico, after the Mexican government dropped a 15 percent import tariff on the devices. The factory employs 200 people and makes about 200,000 phones per month and will continue producing liquid crystal displays and monitors. LG spokesperson Judy Pae said that the dropping of the tariff means there is no need to make the phones in Mexico. LG will now supply Mexico with phones made in its Sao Paulo, Brazil, plant, where it manufactures over 1 million handsets per month.
• Toshiba will stop manufacturing cell phones in its home country of Japan due to a drop-off in demand caused by the country’s severe economic decline. The facility is Toshiba’s only domestic plant. Toshiba lost 343.6 billion yen in its first quarter as its global handset sales plunged to 3 million units compared to 6 million units last year. The loss was Toshiba’s largest ever and its first annual net loss in seven years.
• Nokia plans to widen layoffs as part of ongoing cost cutting measures aimed at dealing with weak demand in global markets. It will also offer buyout deals to 320 employees at its manufacturing facility in Finland after a similar deal for 1,000 global Nokia employees was successful. Nokia announced earlier this year it could cut 2,400 jobs from its global workforce and temporarily lay off 2,500 of its workers in Finland.
• Profits at Vodafone Group PLC were cut in half by a $9.1 billion writedown related to its operations in Spain, Turkey and Ghana. However, the company’s revenue rose 16 percent as the company posted improved sales in all regions. Sales grew the most in Asia Pacific and Middle East with a 32 percent increase, followed by 14 percent in Europe and 11 percent in Africa and central Europe.