By Scott Moritz

Qualcomm (QCOM) joined tech’s growing crowd of downward revisionists as the slumping global economy forced the company to slash its financial targets.

While the San Diego wireless chipmaker turned in a strong fiscal fourth quarter Thursday, Qualcomm like several tech giants – including Cisco (CSCO), Intel (INTC) and Apple (AAPL) – have lowered financial projections as business took a nose dive this fall.

Qualcomm posted adjusted earnings of $1.06 billion or 63 cents a share, a 17% increase over the 54 cent pro forma profit in the year ago period and 3 cents above analysts estimates, according to Thomson First Call.

Sales for the company’s fourth quarter ended in September were $3.3 billion, up $1 billion or 45 % over the same period a year ago. Analysts had anticipated revenue of $2.86 billion.

Similar to Cisco, which saw strong pre-October results yet dire post-October conditions, Qualcomm pulled down its forecast for the current quarter.

“As a result of the credit crisis and the economic uncertainty, our guidance reflects slower end-market device growth for 2009 than previously anticipated,” said CEO Paul Jacobs in a statement.

Looking ahead, Qualcomm cut its December quarter adjusted earnings forecast to a range around 48 cents or 8% below year-ago levels. Sales are now expected to drop 4% on a year-over-year basis to $2.4 billion roughly flat sequentially. Analysts had been looking for earnings of 61 cents on revenue of $2.9 billion.

Qualcomm shares dropped 3% in after-hours trading after closing at $33.05 Thursday.

Qualcomm, which makes components for cell phones and licenses wireless technology, says December-quarter chip shipments will drop to 62.5 million from the 79 million level a year ago. And the company predicts the average selling price for mobile phones will fall to $205 from $211 last year.

By Scott Moritz

Free. That’s Vodafone’s (VOD) recently-unveiled price for the hotly-anticipated touchscreen BlackBerry Storm from Research in Motion (RIM) in the United Kingdom.

In a sign of just how desperate phone companies are to lock customers in to lengthy contracts, Verizon’s (VZ) wireless partner is willing to subsidize the Storm – which sells for about $500 without a calling plan – in order to lure subscribers in England.

Though a final decision has yet to be made, Verizon is considering the same strategy for the Storm’s U.S. debut next month, according to an industry source familiar with the discussions. Another person close to the company says it’s unlikely the Storm will be free.

Verizon declined to comment on its pricing plan for the Storm.

The fact that Verizon is even considering a free phone highlights the competitive pressure created when AT&T (T) started selling a heavily-subsidized Apple (AAPL) iPhone for $199.

Most industry analysts expect the Storm, which has received favorable reviews, to be priced at or below the iPhone.

While Verizon would like to use its exclusive Storm deal to gain an edge in the smartphone market, selling it for free “would be breaking new ground for Verizon,” said Roger Entner, an analyst with Nielsen IAG’s . “It’s likely that they will put it at $150 and maybe $99 if they want to ship massive volumes during the holiday.” At either price, the Storm would be heavily discounted.

Verizon has come up short on blockbuster phones over the past year and a half as the iPhone has become the icon of the smartphone market. AT&T has been a driving force in the U.S. wireless market thanks to the iPhone, which pulls in an average $95 per month. But that drive has also come at a steep price to Ma Bell, which forks over $375 upfront for every iPhone sold. That cost the company $900 million in the third quarter.

For RIM, the Storm represents its biggest step yet into the consumer market as it tries to derail the success of the iPhone. One major challenge is to get devotees of BlackBerry’s physical keyboard to embrace the clickable touchscreen keypad on the Storm. The iPhone’s onscreen keyboard has presented some difficulties for many typists.

So far, Verizon hasn’t had much success with its touchscreen devices. But the Storm, if it’s a hit, could finally establish Verizon as a player in the red-hot touchscreen market. What’s more, it could not only entice new customers, but also convert old lower-paying customers to more expensive contracts. Each Storm subscriber will have to sign up for a BlackBerry e-mail and calling plan, which currently starts at $80 a month.

By Scott Moritz

With touchscreen phones all the rage, and U.S. telcos following AT&T’s (T) lead of cutting the price of Apple’s (AAPL) iPhone, it would seem Nokia (NOK) will be left out of the smartphone party this year.

The Finnish phone giant won’t have its closely-watched 5800 phone – Nokia’s music-loaded take on the iPhone – available here until sometime in the first half of next year, according to people familiar with the phone. Nokia wasn’t immediately available for comment.

And even when it arrives, Nokia has lacked a big U.S. phone partner that would provide the subsidy necessary to put it under the $200 range. At full price, it will have a hard time making a big splash.

“You could look at it as having a 100% upside,” says Nielson IAG analyst Roger Entner, referring to Nokia’s measly share of the U.S. market. Make that a potential upside of 95.5% since Nokia’s slice of the U.S. market has now fallen a percentage point from year-ago levels to 4.5%.

These numbers were part of Nokia’s overall solid third-quarter performance reported Thursday. Nokia posted an adjusted profit of 44 cents a share, down from the 55 cents it netted last year, but in line with analysts estimates. Sales fell 5% to $16.4 billion from $17.3 billion in the year-ago quarter and below the $17.2 billion street estimate.

After hitting a new four-year low, Nokia shares rebounded a bit Thursday up 4% as investors took some confidence from the fact that it met estimates.

As Nokia predicted, its worldwide market share fell to 38% in the third quarter from 40% in the prior period. The decline, according to Nokia, reflects the company’s unwillingness to cut phone prices amid a heated price war in some regions.

Nokia has managed to grab and hold onto the No.1 phone supplier position by honing its skills at making low- and medium-priced phones for a global audience. This focus on the mainstream has caused Nokia to be consistently late to fashion trends like flip phones, ultrathin designs and now touchscreens.

After a strong start in the smartphone wars with over half the global market in 2007, Nokia has dropped to a 35% slice in the third quarter from 48% of the market in the second quarter, according to Morgan Stanley analyst Jim Dawson. The alarming sequential drop is a reflection of how strong rivals like Apple and Research in Motion (RIMM) have grown. The smartphone market will get a new challenger later this month with the arrival of Google’s (GOOG) Android-powered G1 phone at T-Mobile.

But while 2008 is not going to be a big year here for Nokia, the trends – aside from the slumping global economy – are promising overall.

Each player comes from with a different specialty to the smartphone market, says Entner. Apple and Google aim for a strong Internet experience and RIM’s BlackBerry Storm hopes to capitalizes on its successful e-mail background with a touchscreen design. “Nokia comes from a mobile phone approach,” says Entner.

“Nokia sees the phone as an integrated device.” says Entner. In the past three years, Nokia has acquired mobile e-mail shop Intellisync, GPS mapper Navteq and digital media delivery system Loudeye in an effort to control the delivery of services like e-mail, navigation, photography, music, videos, games and the Internet. 

Of course, all this will matter more in the U.S. when Nokia can deliver the device.

By Scott Moritz

NEW YORK – A brief hands-on experience with the Google (GOOG) G1 phone gives the impression that after a slew of touchscreen duds from other telcos, Apple’s (AAPL) iPhone finally has a worthy rival.

The highly-anticipated HTC phone for T-Mobile (DT) was unveiled in New York Tuesday, and kiosks with technical experts were set up so media people could run the first Android-powered phone through some tricks. T-Mobile will start selling the phone Oct. 22 for $179 with a two-year contract.

The G1 has a large touchscreen, nearly the same size as the iPhone. But unlike the iPhone, there is a physical keyboard under the slide-open screen. People familiar with the iPhone will find the G1 a little lighter and thicker. The G1, for you ultra-thin fans, is about 3/4 of an inch thick, downright portly compared to the svelte half-inch iPhone.

Navigating the screen is fairly easy and there are several ways to move around. The touchscreen has a swipe capability that allows you to flick up and down or side to side. There is also a small trackball-type button at the bottom of the phone for scrolling.

The 3G network coverage at the show – only 16 cities currently have T-Mobile’s 3G networks – was fast. Google’s homepage loaded in five seconds and Google search results also popped up in five seconds. Sites like CNNMoney and Fortune took about 17 seconds to load. That is a fairly standard 3G speed.

Calls worked, and the sound was clear, for those considering the device as a phone primarily.

It is clear, however, that with Google’s support, Android and HTC have made a solid Internet device that combines web access with technology like GPS and software like Google Maps. Applications like Compass Mode, as Fortune’s Philip Elmer-Dewitt explains, gives you a 360-degree street view, a trick that has been limited to PCs until now.

The phone has so-called push e-mail through its Gmail service. As Fortune reported Monday, T-Mobile was considering a low-tier price plan that would give G1 users free e-mail without a data plan. T-Mobile technology chief Cole Brodman says the company looked at a few different pricing plans, but decided that the e-mail only data plan “doesn’t do the device justice.”

The G1 will have two monthly price options, $25 for data plan limited to 400 text messages or $35 for unlimited data. That’s compares with AT&T’s $30 and $45 data plans for the iPhone.

HTC’s touchscreen has some familiar features, like a shifting orientation if the user tips the phone on its side. It also has a zoom-in function that is done with plus and minus buttons on the screen rather than the two finger pinch or separate approach on the iPhone.

The G1 allows dragging and dropping of pictures and text, a feature the iPhone still lacks. The music player was easy to use and there is a direct link to Amazon’s music store.

Overall, and first impressions being what they are,  the G1 stands well above disappointing touchscreens like Verizon’s (VZ) LG Voyager or Sprint’s (S) Samsung Instinct. And until Research in Motion (RIMM) delivers its touchscreen Storm BlackBerry, T-Mobile’s G1 is the toughest competition yet to the iconic iPhone.

By Scott Moritz

Android lands at T-Mobile Tuesday, and as part of the effort to deliver the Google phone to the mobile market, T-Mobile is considering including free e-mail access.

The new Android-powered phone will have Google’s (GOOG) Gmail service built in, and T-Mobile executives are considering offering access to Gmail free, without the need for a data plan, says one person close to the discussions.

The HTC-manufactured T-Mobile phone will be the first of the hotly-anticipated Android-operated handsets, and one of several new challengers to Apple’s (AAPL) iPhone. The Android project was created by Google to cultivate an open application platform to operate next-generation mobile phones.  T-Mobile  – a unit of Deutshe Telekom (DT) - is expected to unveil the phone during a press conference at 10:30 ET Tuesday, and offer it for sale later this fall.

Analysts see the Google phone as the beginning of an important lead in mobile Internet advertising through ads appearing on Android powered phones. Sandeep Aggarwal, an analyst with Collins Stewart, estimates that the phone will generate $5 billion in incremental revenue for Google by 2011.

Should T-Mobile decide to offer free Gmail access, it would be seen as a big counter move to Research in Motion’s (RIMM) BlackBerry e-mail service, which costs $15 a month extra. And if telcos embrace Google’s ad-supported free e-mail, it could help drive Google’s ultimate aim to spread its successful desktop advertising business to mobile phones.

The move to provide free Gmail has risks, however.

T-Mobile could undercut its own data revenue stream from BlackBerry subscribers if users trade in their Curves and Pearls for the Android phone. But T-Mobile, the No.4 wireless shop, needs an attention-getting strategy like free e-mail to help set itself apart from bigger players like AT&T (T), Verizon (VZ) and Sprint (S).  

Google referred calls for comment to T-Mobile and a T-Mobile representative could not provide an immediate comment.

As for the HTC Android phone itself, one user who got an early trial described the slide out keyboard as a little awkward for some typing tasks. The browsing quality however was “better than BlackBerry and close to the iPhone.”

By Michal Lev-Ram

SAN FRANCISCO – CEOs from Sprint, T-Mobile and Verizon Wireless extolled the virtues of open networks -  as long as those networks don’t get too open – Wednesday at the CTIA wireless conference in San Francisco.

The executives took the stage to discuss “openness” -  letting consumers use any mobile device or application over any cellular network. Wireless carriers have traditionally served as gatekeepers to their networks, deciding which applications and even which websites their subscribers  can access.

But that’s all changing. Well, sort of.

T-Mobile (DT) CEO Robert Dotson  told the audience that while the so-called “walled garden” is a thing of the past, carriers need to retain some control to ensure “security and privacy” and provide a reliable experience for consumers.

“There needs to be some stewardship and control,” said Dotson, who argued that a mobile operator can’t guarantee services like voicemail and multimedia messaging will work smoothly when consumers use a phone that’s not optimized for their network.

Sprint (S) CEO Dan Hesse said that in March his company began allowing full Internet browsing, meaning that Sprint subscribers can now look up any website on their mobile browser, even those that aren’t “optimized” for mobile use.

Verizon (VZ) CEO Lowell McAdam also plugged his company’s commitment to openness by pulling out of his pocket two non-Verizon devices (a $69 phone from prepaid service provider AirVoice and a wireless router for the insurance industry) that are currently running on the company’s network. Verizon recently opened its network to outside handsets that meet its minimum testing standards.

Despite vowing their allegiance to openness, all three CEOs echoed claims that truly opening up their networks wouldn’t be all that beneficial to consumers.

McAdam, for example, argued that separating phones from service plans would mean people will have to pay more for cell phones that are now heavily subsidized by carriers in exchange for two-year service contracts.

What’s more, said McAdam, people are accustomed to being able to walk into their carrier’s stores when they have problems with their device. With a more open system, the carrier wouldn’t be involved with the sale of all devices running on their networks, and thus wouldn’t be too keen on helping customers resolve hardware or software issues created by other companies.

“When an application crashes on a Dell laptop you don’t call your cable provider,” said McAdam.

By Scott Moritz

The spending slowdown hitting the technology industry has slammed Ciena (CIEN), the telecommunications equipment maker. In an earnings report Thursday, the company cited a drop in customer orders in slashing its fourth-quarter sales forecast 24% below expectations.

Ciena’s third-quarter sales and earnings were solid despite signs of sluggish demand from corporations. The Linthicum, Md.-based company posted adjusted earnings of 37 cents a share, down from 41 cents in the year-ago period, but in line with analysts’ estimates. Sales for the quarter were $253.2 million, up 23% from last year and also in line with Wall Street targets.

But looking ahead, Ciena warned that “order delays from many of our tier one service provider customers,” would likely result in fiscal fourth-quarter revenue in the $200 million range. The projected sales shortfall is well below the $263 million level analysts had been expecting.

Ciena shares fell 17% in pre-market trading Thursday.

“While current economic conditions warrant a cautious near-term outlook, the fundamental drivers of our business – growing capacity demands and the transition to more efficient, more powerful, automated networks – remain sound,” Ciena CEO Gary Smith said in a press release.

Ciena is somewhat of a niche player in the global networking sector, but its headwinds hint that spending cuts among big telcos continues and may be steepening. Rivals like Cisco (CSCO) and Ericsson (ERIC) were down 1% in early trading on news of Ciena’s big miss. Ciena also joins Corning (GLW) as the second tech shop to warn of slumping orders in recent days.

By Scott Moritz

Cablevision’s Dolan family is weighing its options again. But while the chilly credit market puts some boundaries on the scope of the Long Island cable company’s options, some of the more likely moves include a dividend and a spinoff of its Rainbow Media unit, say analysts.

“We arrive at the view that given the current state of the credit markets and $1.7 billion in maturities [Cablevision faces] next year, the company’s options are fairly limited,” Goldman Sach’s analysts wrote in a research note Tuesday.

Shares of Cablevision (CVC), the No.6 cable provider, shot up 7% Tuesday on word that the company was exploring moves to enhance shareholder value. Holding about 20% of the company’s stock, the Dolan family has a keen eye on trying to extract more value for the stockholders. The Dolans have made three failed bids to take the company private, but with the lack of big financing available at the moment, another take-private move is probably not in the works.

Most likely is the sale or spin off of Rainbow, the holding company behind TV programming including AMC, WE and IFC. In February, the Dolans were shopping the media unit around but target buyers like Liberty Media (LINTA) didn’t bite.

If Cablevision and its bankers can’t find a buyer for Rainbow, the company may spin the unit off to shareholders and, with the sale, toss in new debt to finance a dividend, say analysts.

“We believe the company could institute a regular dividend on the order of $1 per share,” Goldman’s analysts say. The $1 annual dividend would be within reach, costing Cablevision about $280 million, or 34% of the company’s free cash flow in 2008, according to Goldman.

A bigger special dividend is less likely since the company would have to seek financing to make a sizeable one-time payout.

The move comes as Cablevision, along with Comcast (CMCSA), Verizon (VZ) and AT&T (T), all face increasing expansion costs and cutthroat competition.

By Scott Moritz

Verizon’s (VZ) strong wireless gains help offset weaker-than-expected video growth and an alarming drop in phone lines.

The New York phone giant posted adjusted second-quarter earnings of $1.9 billion or 67 cents a share, up from $1.7 billion or 58 cents a year ago. Analysts were looking for pro forma profit of 65 cents, according to a First Call tally.

Sales for the quarter were $24.1 billion up from $23 billion last year, and in line with analysts’ expectations.

On the wireless side, Verizon added 1.5 million net new customers, outpacing rival AT&T’s (T) 1.3 million net new customer contracts. Verizon also turned in a strong performance on customer loyalty, with a monthly defection rate of 1.12%, down from 1.19% in the first quarter and 1.26% a year ago. Verizon now has 68.7 million customers compared with AT&T’s 72.9 million users.

But the wireline unit saw an alarming decrease in phone lines. Verizon lost 920,000 access lines in its core landline phone business, adding up to an 11.4% drop from year-ago levels. And Fios, Verizon’s fiber-optic service, added only 176,000 new TV customers, well below the 225,000 target some analysts had anticipated.

Verizon announced Monday that it has now introduced its Fios service to New York. This is Verizon’s first attempt to sell its so-called triple play offer of TV, Net and phone service in New York, where Time Warner Cable (TWC) and Cablevision (CVC) have dominated the market.

Verizon shares were down 26 cents to $34.19 in early trading Monday.

By Scott Moritz

Nokia (NOK) successfully navigated European regulatory review, gaining approval to acquire map maker Navteq (NVT).

The No.1 mobile phone maker is expected to close the $7.72 billion deal with the No.1 GPS map maker next week. The move follows the completion of a $4.5 billion merger of GPS device maker TomTom with digital mapper Tele Atlas last month.

Both deals received lengthy European Commission scrutiny as regulators pondered the effects of the two largest GPS map suppliers falling into the hands of device manufacturers. Both deals featured a customer buying a supplier, raising questions about continued supplies to competitors.

For Nokia, the Navteq buy is another step outside its core phone making business and part of an overall effort to be a mobile services shop.

“Navteq will play a key role in our Internet services strategy with world-leading maps and navigation industry expertise, a strong customer base and industry-leading map data and technology platform offering the broadest geographical coverage,” said Nokia CEO Olli-Pekka Kallasvuo in a press release Wednesday.

The deal solidifies Nokia’s GPS position, allowing it expand on its existing so-called location-based services, like turn-by-turn navigation, local searching to find stores and restaurants within a given vicinity, and location messaging that lets users send others a map that pinpoints where they are. 

Nokia’s new service strategy is coming to fruition at a time when growth in global phone sales has started to slow. GPS is one of several services Nokia has targeted for the wireless consumer. The big Finnish phone shop has opened an online music store and signed agreements with record labels to offer songs somewhat similar to Apple’s (AAPL) iTunes site.

Nokia also moved into e-mail service as part of its acquisition of IntelliSync two years ago. Nokia hopes to push further into the corporate market held firmly by Research in Motion’s (RIMM) BlackBerry. The plan involves mobile connections to Microsoft’s Exchange servers.

With nearly 40% of the world’s cell phone market, Nokia is very exposed to a slowdown in sales. And next week, Apple’s newest iPhone will hit the market. The timing of the service push could help offset the effects of the cooling trend and offer something in the absence of any stunning new phones.

Meanwhile, GPS device giant Garmin (GRMN) has plans to offer a touchscreen phone called the nuvifone as early as this summer. The nuvifone is seen as Garmin’s answer to all the smartphone manufacturers that have pushed into GPS services.