Alcatel-Lucent, the French-American telecommunications equipment maker, reported a third-quarter loss of $373 million today. To help the bottom line, the company plans to layoff another 4,000 employees beyond the February announcement of 12,500 layoffs. This amounts to a 20% reduction in payroll. It is hoped this move will save the company an additional $578 million by 2009.

CEO Patricia Russo, the architect of the company’s $2.45 billion cost-cutting plans, denies reports that the board of directors is unhappy with her future plans for Alcatel-Lucent. Russo has lobbied for a slimmed down management team, a more streamlined core carrier business and a focus on higher-margin businesses.

“Volumes we are seeing are not what we expected,” Russo said in a conference call. “These are difficult but necessary decisions, and we will manage these reductions with care.”

Chief Financial Officer Jean-Pascal Beaufret said he will leave the company “in coming weeks.” He will be replaced by Hubert De Pesquidoux, previously CFO of Alcatel North America.

MobileCrunch reported earlier this month that Ericsson’s 3rd Quarter Profits (were) down 36%. Ericsson has 45% of the telecommunication equipment market and blames lower profits on a slowdown in equipment investment by mobile phone providers. This ripple is now being reported by smaller companies like Alcatel-Lucent.

The third-quarter loss of 258 million euros was slightly larger than analysts’ expectations, and contrasts to a pro forma net profit of 532 million euros a year ago. Sales in the quarter slumped 11 percent to 4.35 billion euros ($6.27 billion), hurt by lower investments in U.S. wireless networks.

Overall revenues for the year are expected to be flat, but shares of Alcatel-Lucent rose 1.4 percent to 6.72 euros ($9.58) in Paris after the third-quarter news came out. Cheuvreux analyst Remi Thomas doesn’t think the company’s plans go far enough to make it profitable again. He believes revenue is so short of expectation that Alcatel-Lucent needs to save an addition 1 billion euros ($1.44 billion). This would require the company to cut an extra 10,000 jobs.

Alcatel-Lucent

Myxer, a mobile content delivery company, announced that it has reached over 3 million users, making it one of the largest distributors of mobile content. In April of this year Myxer reached 1 million users and has tripled that number in less than six months. If growth continues at this pace, within ten years aliens in a galaxy far, far away will be downloading wallpaper and ringtones from Myxer.

Currently, more than 7 million pieces if mobile content are downloaded per month, at a rate of roughly 3 downloads per second. Myxer offers over 150,000 free ad-supported ringtones, wallpapers and videos. Users can make their own ringtones, videos and wallpaper from music and files a customer already owns.

“We think that reaching this milestone so quickly is a statement about how easy our platform and mobile content site are to use, and is also a clear confirmation of the growing demand for mobile content in general,” said Myk Willis, founder and chief technology officer of Myxer. “Our continued growth will be fueled by our aggressive recruitment of content partners, user adoption of new content types like video and over-the-air song downloads, and the vast international opportunity we are just beginning to tap into.”

Myxer

Rumors about Google jumping into the phone business picked up again today with the Wall Street Journal reporting that Google phones will be available by mid-2008. MobileCrunch reported last month (Google Rumors: GPay and GPhone) that Google powered phones may be in the works. While the company is unwilling to comment at this time, the Wall Street Journal thinks that an announcement is coming within the next two weeks.

There is compelling evidence to suggest that Google is moving into the phone business. Services like Google Maps, YouTube and Gmail are perfect applications for mobile devices, so why not offer an all Google package? The company has increased its media reach over the last few years to include online video, television, radio and print advertising. An inexpensive handset that can deliver multiple forms of media is a good fit with Google’s past acquisitions. If it can make a cheap phone call, so much the better.

And finally, Google is a major bidder in the upcoming sale of the 700 MHz spectrum by the F.C.C. This frequency his highly prized by mobile phone providers for its ability to more easily penetrate building walls than current frequencies.

We’ll have to sit back and wait for Google to make an announcement. In the mean time it will be fun to speculate on how a Google phone will be all things to all people. I can see a phone so cheap people are paid money to take one, all applications are free, and the battery is replaced by a tiny fusion reactor.

NBC Universal has hired SinglePoint, a wireless messaging service, to launch one of the biggest mobile marketing initiative ever conducted by a media company. SinglePoint will manage and execute multiple participation media campaigns such as mobile voting, sweepstakes, contests, and mobile text news alerts. By outbidding its competitors, SinglePoint has won the largest Interactive Television (iTV) contract of its kind in the mobile marketing arena.

SinglePoint will be developing and managing large-scale, cross carrier iTV messaging events for multiple properties across NBC Universal including NBC, CNBC, MSNBC, Bravo, Telemundo, USA, NBC Sports, NBC News, iVillage and venue-related activities for Universal theme parks.

“In today’s competitive TV environment, we constantly evaluate how new technologies can better engage viewers and, ultimately, build stronger relationships with them,” said Jon Dakss, Vice President of Technology Product Development for NBC Universal. “SinglePoint stands apart in the increasingly critical mobile segment thanks to their ability to manage the entire participation media process – from connectivity to carrier relations to client services. Working with SinglePoint will allow us to strengthen our market leadership, as well as win and maintain the loyalty of our viewers.”

“There is no question that the wireless industry has given new meaning to participation media by adding entertainment, social and economic value to some of today’s most popular TV programs,” said Rich Begert, President and CEO of SinglePoint. “We can not express enough how extremely pleased we are to work with NBC Universal and drive the mobile component of their leading franchises. Our tools empower customers to drive growth, connect to end-users and enhance viewing experiences. We expect this strategic partnership will set a new bar for participation media in the U.S.”

For decades television viewing has been criticized as being a totally passive activity that at the very least leads to lazy thinking. I have always thought that it isn’t if you watch T.V. but what you watch and how you watch it that is important. A service like the one SinglePoint is providing for NBC will make viewers feel like they are part of the show, which has the potential for generating more viewer loyalty. By actively engaging with content, viewers’ minds will be more engaged and stimulated then if they watch the content without an outlet for expressing an opinion.

SinglePoint
NBC Universal

Verizon Communications announced today that its quarterly revenue rose due to strong wireless subscription growth. Verizon Wireless, which Verizon Communications owns with Vodafone, added 1.8 million net retail customers in the quarter, giving the company 63.7 million subscribers.

“It’s a story of tremendous strength in wireless and continued deterioration in wire line,” said Sanford C. Bernstein analyst Craig Moffett.

Even though wireless subscription sales are strong, Verizon profits are down due to merger-related costs and other items. Verizon repurchased nearly $800 million of its shares in the third-quarter and the company said it will increase its 2007 share buyback target by 25 percent to $2.5 billion. Verizon’s third-quarter net income was $1.27 billion, or 44 cents per share, compared with $1.92 billion, or 66 cents a share, a year earlier.

“It was a very solid quarter, not spectacular,” said analyst Chris King of Stifel Nicolaus, who was not impressed with the performance of Verizon’s DSL service, which offers high speed Internet over traditional phone lines. “If there was one weak spot in the numbers that’s on the DSL side,” but King added that was “a relatively low profit margin business for them so it’s something I’m not overly concerned with. FiOS and wireless are far more important.”

Verizon is investing in its FiOS high-speed fiber optic service, which allows the company to deliver video for television sets. Verizon wants to provide subscribers with a triple-play all in one package of video, phone and Internet. This will allow Verizon to compete with cable operators like Comcast who offer video, phone and Internet packages.

Verizon Communications

Each week MobileCrunchArcade compiles the biggest news from the world of mobile gaming.

Verizon Wireless and SkyZone Entertainment announced a partnership this week to provide South Koreans greater access to SkyZone’s mobile gaming archive. SkyZone offers a full lineup of richly textured 3D graphics and games that feature multiplayer connectivity between PC and mobile platforms. Popular titles include Duke Nukem Mobile, Extreme Hangman, Snake Mayhem 2, Rocky Boxing and the Scoop Twist franchise. I wonder if the State Department is watching this development. If North Korea gets Duke Nukem the whole region could destabilize. Japan may be forced to counter with Godzilla H-bomb.

Glu, a mobile game publisher, announced its lineup for the first half of 2008 at the CTIA Wireless I.T. & Entertainment convention this week. Titles include, Shadowalker, Space Monkey, Pooin’ Panda, Frantic Factory, Get Cookin’, CrossPix by Glu, Super Slam Ping Pong!, Vegas Hustler, and Brain Genius 2. It looks like there’s a lot of thumb thumping action coming next year that will keep you glued to your mobile phone.

Congratulations go out to Stephen Hetrick of Tampa Florida. His character design won Konami Digital Entertainment’s design contest for the Contra 4 mobile game. To celebrate the title’s 20th anniversary, Mr. Hetrick’s character was judged to capture the story, game play, look and feel of Contra over all other entries. His character will be featured in the upcoming mobile game, and Mr. Hetrick will receive a game credit and a Contra 20th Anniversary designer’s award. Be careful where you travel with that award Stephen. Daniel Ortega is in charge of Nicaragua again and he isn’t too fond of Contras.

That is this week’s MobileCrunch Arcade game roundup. Remember, exercise those thumbs, recharge the battery and never take your eyes off the screen.

Rogers, a Canadian wireless service provider, announced today it has begun field trials of its 7.2 Mbps wireless data service in the Brampton and Montreal areas. The trials utilize 3.5 generation wireless HSPA/UMTS technology, allowing a peak download speed of 7.2 Mbps, the fastest speed in Canada.

“The consumer appetite for mobile applications is undeniable in Canada and around the world,” said Rob Bruce, President, Rogers Wireless.” The data speeds achieved in this trial will enable Rogers to meet our customers’ needs with the most advanced, innovative services today and in the future.”

This test puts Rogers among the top one percent of GMS carriers worldwide that support 7.2 Mbps speeds. This trial is the next generation of Roger’s GMS network, and represents a significant investment in technology. Rogers will have spent around $500 million over the past two years upgrading its network.

“Rogers is continuing to trial, launch and deliver innovative and reliable next generation wireless telecommunications services to Canadians,” says industry analyst, Mark Goldberg, of Mark H. Goldberg and Associates Inc. “The availability of 3.5G mobile services in our own backyard keeps Canada at the front of the world stage with respect to telecommunications services and applications.”

Rogers

Emdigo has partnered with INgrooves to launch the INgrooves Music Screensaver this November. The screensavers will be available on Verizon and Alltel Wireless for $2.99 per download. The application animates artists in 3D with the artists’ music when the phone is flipped open. Top artists Tila Tequila, Too Short and B Legit are part of the initial offering.

“By combining our catalogue of music artists and images with Emdigo’s proprietary mobile content development technology, we are able to bring music fans a completely new and unique type of mobile phone content featuring our artists and animated graphics,” said Adam Hiles, INgrooves COO. “We¹re proud to be leading off our partnership offering with Tila Tequila, Too Short and B Legit as our initial featured artists.”

The INgrooves Music Screensaver includes a catalog of artists by genre, 15 second audio clips of featured songs, photos of artists, album cover artwork and interactive 3D animated avatars of the top 10 artists per genre that can be saved as screensavers.

“Emdigo¹s partnership with INgrooves allows us to bring a new and entertaining visual element to music content for mobile,” said Steve Gleitsmann, president of Emdigo. “Our animated 3D graphics paired with music from INgrooves is merely the beginning of our plans to expand our efforts in the music space. Through partnerships like this one with
INgrooves, Emdigo continues to strive towards improving the content available on mobile today.”

Emdigo
INgrooves

As fires blaze across southern California forcing hundreds of thousands to flee, the Wireless foundation and American Red Cross announced that most American wireless subscribers can make a charitable donation to the Red Cross Disaster relief Fund through a program called Text 2Help. Subscribers of participating wireless carriers can donate $5 to relief efforts simply by text messaging keyword “GIVE” to “2HELP” (24357). The donations will appear on customers’ monthly bills or be debited from prepaid account balances.

Text 2HELP was first used to raise funds for Hurricane Katrina relief. The program is initiated whenever a natural disaster occurs and an American Red Cross assessment determines its relief effort will require a substantial level of support. Text 2HELP will be activated for 60 days so if you are planning to donate there is plenty of time. The Red Cross provides those in need with shelter, food, water, clean up and comfort kits, and medical and mental health services.

“The wildfires in southern California have caused tragic loss of life, serious injuries, and enormous damage, and now Americans wanting to lend a hand to the American Red Cross Disaster Relief Fund can do that through Text 2HELP™,” said Steve Largent, President and CEO of CTIA-The Wireless Association and President of The Wireless Foundation, the charitable organization coordinating Text 2HELP™. “Through a simple text message, Americans can send a donation to the American Red Cross that will be put to good use in providing those in need with invaluable support during their time of crisis.”

Wireless carriers participating in Text 2HELP™ include AT&T Mobility, Alltel, Boost Mobile, Dobson Communications Corporation, Sprint, T-Mobile and Verizon Wireless. VeriSign is powering the intelligent messaging infrastructure to enable the short message service.

American Red Cross

Cellufun announced today its Hellofun celebration. During Hellofun, users can decorate their homepages, dress up their avatars in costumes and pass out virtual tricks and treats. By visiting other homepages, users collect virtual treats or tricks while watching their own homepage to give as good as they take. If someone is stingy in giving out treats, the word will get out to the rest of the community and that person will be given tricks instead of treats when going from homepage to homepage. And it isn’t easy to be generous. Treats have to be purchased with Cellupoints.

At midnight on October 31st, prizes will be awarded to the most generous players, and to those accumulating the most treats and tricks. Cellufun will also have two scavenger hunts. The first person to give a treat to every costume type and the first to go online at every decorative banner type will win a surprise. Trophies will be awarded for each scavenger winner and to the person giving out the most treats.

“With Hellofun, we wanted to allow our mobile community to celebrate the
holidays together and capture that sense of wonder you felt as a kid when
you got that special candy”, said Arthur Goikhman, Cellufun’s CEO. “So we
created a whole concept of visiting each other’s mobile profiles, standing
in line and trick-or-treating, creating suspense about what you’re actually
going to get. Costumes matter, too – a poorly matching costume might get a
rock, or a trick; a well conceived one, a chocolate.”

Cellufun

For years Japanese women have endured being groped while in large crowds. Packed commuter trains are notorious prowling areas for men who feel the need to sexually assault random women. According to Tokyo police, 1853 men were arrested for groping passengers on Tokyo trains in 2005. But the harassment on trains is thought to be much higher because many women are too embarrassed to report sexual assault.

To combat this activity, games developer Takahashi released Anti-Groping Appli. If a woman thinks she has been groped, she can use the application to give a message to the perceived offender. The application flashes increasingly threatening messages in bold print on the phone’s screen to show the groper. Phrases include, “Excuse me, did you just grope me?” “Groping is a crime,” and “Shall we head to the police?”

Anti-Groping Appli has gained in popularity and reached No.7 in this week’s top-10 mobile phone applications list compiled by Web publisher Spicy Soft.

“I first downloaded this as a joke,” said Spicy Soft official Michika Izumi. “But I think it could be a lifesaver if I get groped.”

Usually we speak to our mobile phones but this is an instance where mobile phones speak for us. And in this case they speak to protect women from being sexually assaulted.

Spicy Soft

Hisense, a Chinese electronics manufacturer, and Qualcomm, a wireless products developer, announced today that Qualcomm MEMS displays will be put into Hisense phones in 2008. The Qualcomm MEMS displays are being touted as superior in viewing quality and lower in power consumption.

Qualcomm has developed the first direct view MEMS display for mobile devices, an innovation that offers display clarity in a wide range of conditions, including bright sunlight. The displays are able to harness ambient light through technology called interferometric modulation (IMOD). By tapping into background light, the display uses less energy than conventional displays. Batteries drain slower allowing more usage time between those inconvenient recharge periods.

“Mobile phone handsets are an ideal application for our MEMS displays
due to their power savings and excellent outdoor viewing quality,” said
James Cathey, vice president of business development for Qualcomm MEMS
Technologies, Inc. “When it comes to cell phones, consumer expectations are
continually increasing in terms of where they can use their phones, what
types of applications they can run and how long they can use them between
charges. Qualcomm’s MEMS displays rise to the challenge on all these
fronts, furthering the cell phone’s position as a ubiquitous consumer
product.”

“This collaboration with Qualcomm MEMS Technologies, Inc. bodes well
for the future of the wireless market and is of great strategic
significance to Hisense,” said Shi Yongchang, general manager of Qingdao
Hisense Communication Co., Ltd. “The technological platform of Qualcomm’s
MEMS display is a real breakthrough in display technology and will lead to
the upgrade of today’s communications technology. We look forward to
launching more innovative products, in cooperation with Qualcomm, to better
serve our customers.”

Qualcomm’s MEMS may be superior to conventional mobile device displays in bright light but when things get darker I don’t see how a display that utilizes ambient light can be an energy saver. The picture may be crisp in a bright setting but how good is it in the dark? I can’t help but think of an old solar calculator I have. It works great when I’m outside and there is a sunny day, but at all the other times I need a number it just collects dust.

Qualcomm
Hisense

KT-Tech, a small start-up company, has revealed its mobile phone videoconferencing application, KTvid. KTvid allows person-to-person videoconferencing in real-time over today’s mainstream cellular networks. The application doesn’t require the high-bandwidth of a 3G cellular network for quality two-way video and audio connectivity so its potential can be realized today. I don’t know how good the picture and sound is but you can be assured that KT-Tech thinks they are high-quality.

“Video has created enormous business opportunities on the Web, but the high cost and low quality of video on today’s cell phones has hindered the adoption of mobile video consumption, real-time video reporting and mobile videoconferencing,” said Rob Lerner, COO of KT-Tech Inc. “We are aiming to lower the barriers to adoption of mobile video by enabling high-quality video on today’s handsets, over today’s cellular networks.”

KT-Tech reveals its videoconferencing application today at the 2007 CTIA Wireless I.T. & Entertainment convention which is being held in San Francisco on October 23-25. If you are at the convention stop by Booth #112 and look at KT-Tech’s product for me. Leave a message in the comments section of this MobileCrunch post and give your opinion as pertaining to the quality of the video and audio, and whatever thoughts you may have.

KT-Tech

AdMob, a mobile advertising company, announced today that it is releasing its first periodic report on data and trends in the mobile market free for download. The report covers the 1.5 billion ads served in the month of September and includes manufacturer, device and country-specific data on AdMob’s top four markets by impressions served. The United States, United Kingdom, India and South Africa are all covered. In the future more countries and handset capability data will be added to the report. New reports will be released free of charge on a periodic basis to create transparency in the growing mobile advertising business.

“AdMob is in the unique position of serving billions of banner and text ads per month for our publisher and advertiser partners,” said Jason Spero, AdMob Vice President Marketing. “AdMob’s leverages our network data to improve targeting and optimize ad serving. We are happy to share this data with the community to empower advertisers and content developers.”

The data was collected using AdMob’s firsthand access into mobile activity which serves billions of banner and text display ads each month to traffic on a wide variety of partner sites, ranging from large media companies like ESPN, CBS and Weather Underground to smaller mobile content sites. In doing so, the mobile advertising company collects data on the activity within the mobile marketplace. For every request, they analyze information available from the user’s mobile browser. From this, the company determines device capabilities and more by using both proprietary and open source methods.

If you are a mobile advertising insider, or interested in advertising on mobile devices, the report may be worth looking at. Traditional media is losing adverting money to the new media, and mobile phones lead the charge in how ads will be seen in the future.

AdMod Report

AT&T announced today that Napster’s entire music catalog of over five million songs will be available to AT&T’s mobile phone customers early next month. The service will expand the company’s offerings beyond the independent music offers through eMusic. This will allow AT&T to compete with Verizon Wireless and Sprint Nextel in the music download arena. AT&T currently allows Napster subscribers to transfer music form their personal computer to their cell phone via a cable or storage card. Both companies hope to improve sales of music by allowing data to be directly downloaded to mobile phones over a WiFi network.

Songs will cost $1.99 each, or $7.49 for five per month. Users who download a song to their phone will get an e-mail allowing them to put a second copy on their personal computer for no extra charge. Apple and Sprint Nextel both sell songs for 99 cents each so it will be interesting to watch and see if AT&T lowers the price of the Napster service in the future. Both companies are hoping that customers won’t be put off by higher charges and make spontaneous price insensitive purchases. The Napster service will not work with Apple’s iPhone, even though AT&T is the exclusive carrier for the iPhone in the United States.

AT&T
Napster

The United Nations telecommunications agency voted to approve WiMax (Worldwide Interoperability for Microwave Access) technology, and make it part of the third-generation (3G) of mobile standards. This endorsement should open up global frequencies to make WiMax a worldwide player in the lucrative 3G market.

WiMax has inherent advantages over Wi-Fi and landline data delivery systems. WiMax is able to hand off a signal from antenna to antenna, allowing a device to hold a connection while in motion, which Wi-Fi can’t do. And if data delivery speed is important, WiMax has the fixed-line broadband connections beat. The typical landline offers speeds around 2 megabits per second, while WiMax connects at speeds up to 70 megabits per seconds.

“We’re super, super, super thrilled,” said Sriram Viswanathan, general manager of Intel’s WiMax business and vice president of Intel Capital. “We’ve been at this for the last three years, and it was a very, very extensive amount of work with a lot of players in the industry.”

Each week MobileCrunchArcade compiles the biggest news from the world of mobile gaming.

Electronic Arts will launch Need for Speed: ProStreet for the mobile phone community later this month. This high octane game will be available in Europe on October 26 and in North America on October 30. Players race 16 high performance cars at 11 famous street racing locations. Winners earn cash to upgrade their cars or save money to buy an even faster racer. The mobile version of the game will allow players to uncover rewards during game play that will help them succeed in the console version of Need for Speed: ProStreet. If the mark of a good driver is someone who can text message while driving, a good virtual driver is someone who can play the console and mobile version of Need for Speed: ProStreet at the same time without crashing.

Vivendi Games Mobile announced this week that the new quest-driven puzzle game, Slide N’ Loop, is now here to exercise bored brains. Players must help Zia find four pieces of a magic antique medallion so she can save her village. Slide N’ Loop presents players with 20 different levels of play, each stage adding new elements that are more challenging then the last. Players score points by matching three, four or five tiles of the same colored objects in a row, on no more than three consecutive moves. I think Zia could more easily save her village by rounding up a platoon of marines instead of colored objects. They wouldn’t even have to be space marines. Regular ones could do the job.

If you are a fan of the television show Heroes you will be happy to learn that Heroes: The Official Mobile Game is now ready to be downloaded onto your mobile device from Gameloft. Players take on the obstacles set before them by playing Hiro, Niki and Peter and by utilizing their unique powers. There are 11 levels in four locations taken right from the Heroes universe. Besides saving the world, players uncover hidden information about the show. I hope in the future Hiro Nakamura manipulates the space-time continuum to convince Gameloft to give the mobile version of Heroes a better title. If there is an unofficial version of the game, can’t Hiro hack into that version and erase it from the world’s phones?

I-Play announced this week that its game FIA World Rally Championship has been nominated for the 2007 International Mobile Gaming (IMGA) Excellence in 3D Award. The game features 16 official World Rally Championship locations that gamers must master in both arcade and championship modes. The IMGA Excellence in 3D Award winner will receive $5,000, software licenses from Adobe, phones from Nokia and a guaranteed contract with an operator and a publisher to market the title. I don’t know why I-Play needs another publisher to publish its game, but awards always look good in the reception room.

Taito announced that an updated version of the classic game Jungle Hunt is now available on 30 Sprint Nextel mobile phones and other select models. Jungle Hunt first debuted in 1982 at your local arcade. In the game the player has to navigate a jungle full of dangerous obstacles including crocodiles and falling rocks, all in an effort to rescue the heroine before she is eaten by cannibals. I wonder if the game can be played on a 1980’s vintage cell phone? There is nothing cooler than a giant handset with a telescoping antenna.

That is this week’s MobileCrunch Arcade game roundup. Remember, exercise those thumbs, recharge the battery and never take your eyes off the screen.

Apple announced that in February it will make a developer’s kit available to independent software makers. This will make it easier for developers not associated with Apple or AT&T to create games, navigation systems, screen-shot capture programs and other tools for the iPhone.

A few weeks ago, the iPhone was updated over-the-air and independently developed software was erased in the process. Apple claimed that this was inadvertent and that the update had not intentionally erased anything. Many did not believe the company. MobileCrunch reported last week that a Lawyer Su(ed) Apple Over iPhone Restrictions like the ones that February’s developer’s kit is meant alleviate. It is difficult to say whether the lifting of restrictions on independent developers is due to lawsuits, or if it is something that Apple has been working on ever since its customers started complaining.

Apple still refuses to lift its carrier restrictions, so iPhone customers in the United States are required to carry AT&T. But the lifting of restrictions on independent software developers should make the iPhone user a little happier. Unaffiliated developers can now compete in the open with official Apple developers. By competing in an open market, iPhone software developers will create better and cheaper products for consumers to choose.

Apple

Ericsson, a company which has 45% of the $35 billion market for mobile network equipment and software, announced that its third-quarter profits fell 36%. Ericsson said the lower profits were driven by weaker-than-expected demand in the United States and Europe. Operators in those markets are cutting costs by pooling and renting networks instead of building their own infrastructure.

Ericsson’s president and chief executive Carl-Henric Svanberg said he decided to announce the drop in profits a week before the company’s earnings conference on October 25. He said that Ericsson would work to improve its internal financial forecasting procedures to avoid further surprises.

“There is no change in the long-term outlook or in the market going forward or in how we see data traffic developing on wireless networks,” Mr. Svanberg said. “But we do need to draw conclusions about how we can better understand the variations that can occur in our industry, and we will improve our early-warning systems.”

Despite attempts to reassure investors, Ericsson shares dropped nearly 24%, to finish trading at 20.10 kronor ($3.11) on the Stockholm exchange. Some investors see Ericsson’s lower profits as evidence that there is a slowdown in demand for third-generation (3G) wireless networks.

A few years after wireless operators started investing billions of dollars to build third-generation networks; operators are beginning to realize that the predicted demand for third-generation technology isn’t as great as hoped. Lower than expected growth is forcing operators to find ways to cut costs.

“What Ericsson is experiencing is affecting the whole industry, not just Ericsson,” said Roland Pitz, an analyst at HVB Bank in Munich. “What we are seeing in Europe especially is that operators are either sharing their networks or renting them out to virtual service providers. The net effect is that the pace of investment in network construction is slowing slightly from what it had been.”

One reason for the decline in expected 3G growth may be due to the aging demographics in Europe and the United States. Fast Internet access and downloadable music videos may be appealing to younger people, but older generations are less likely to want these services. To increase growth, retirees and near-retirees have to be convinced that a mobile phone has more uses to them than just making calls.

Ericsson

MetaCafe has announced it will begin offering video download and streaming to mobile handsets. The offering which will debut next month in Germany, Sweden and the Netherlands will also allow users to upload video directly from the handsets themselves.

The new service is offered by way of a partnership with Peerbox whose solution goes beyond video download/upload to include social functionality such as rating, commenting, etc. Peerbox primarily supports handset vendors Nokia and Sony Ericsson.

The exclusive screenshot below shows how the integration from the MetaCafe side will look like.

Unlike YouTube, MetaCafe has not been afraid to experiment. This partnership comes after moves such as a pilot with adap.tv and the Producer Rewards program.