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This column was originally published on RealMoney on Oct. 18 at 1:36 p.m. EDT. It's being republished as a bonus for TheStreet.com readers.

Motorola's

(MOT)

third-quarter phone-sales numbers were a touch soft, and

Nokia

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probably was also dented by smaller rivals during the quarter. But is that already priced in? I believe Nokia's troubles will pale in comparison to Motorola's quarter, and even see the possibility of a bounce in Nokia shares.

Motorola ended up selling fewer than 2 million more phones during the third quarter than in the second quarter. It's a notably muted seasonal uptick that is hard to explain just by the delay of dual-mode iDEN phones (the official line on why Motorola's unit number came in below 54 million). In sharp contrast, smaller rivals like Sony Ericsson (the joint venture from

Sony

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and

Ericsson

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) and

Samsung

increased their volumes by more than 4 million quarter on quarter.

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This happened largely because SE and Samsung began ramping up key new winter models around July. Many of Motorola's important launches started rolling out two or three months later. It's understandable that the default position of analysts upbeat about Motorola's third quarter is now to claim that the third-quarter volume issue was just a blip on the radar. This could be the case if the new RAZR spinoffs take off in a big way. After all, Samsung's notoriously weak second quarter was the result of a trough between two major product waves.

On the other hand, the renaissance of Sony Ericsson, Samsung and LG doesn't show any signs of peaking. It only got into full swing around August, after all. As Motorola begins to ramp up the KRZR line in Europe this month, its miniature rivals are rapidly expanding the product ranges that triumphed during the third quarter.

Samsung is launching a new thin phone that weighs just 71 grams and is just 7 mm thick. It's effortlessly slimmer and lighter than the KRZR models.

LG

is doing a Pink variant of the Chocolate model, and Sony Ericsson may have hit a jackpot with the cheaper and smaller Walkman phone model that is now creating a lot of buzz in Europe.

In contrast, many of Motorola's RAZR variants are curiously lacking in wow factor. The KRZR K1 is both heavier and thicker than some old RAZR models. It's still a nicely designed model, but it doesn't have the impact of the new Samsung miniatures. Motorola no longer does the thinnest, lightest or most exotic midpriced models. This is an issue that the KRZR launches don't fix. They actually underline it.

Nokia is not a participant in the thin-phone competition -- and industry rumors in Finland imply that the first real Nokia thin phones may not launch in full volumes until the second quarter of 2006. This is a real problem, although not something the company can't overcome in other niches. Unfortunately, the new Samsung and LG sliders have pushed Nokia to the sidelines in the slider niche as well -- just as Sony Ericsson's Walkman line is clearly getting better traction than Nokia's N series music phones.

It's this combination of niche issues that plague Nokia this winter. Thin phones, sliders and music phones are relatively limited markets, but taken together, they do make up a healthy chunk of the midrange market in Western Europe. The launches of the relatively pricey new N series models have not gone smoothly for Nokia this summer and autumn. Many of these phones weigh 120-150 grams and cut directly against the grain of the current miniaturization craze.

I'm somewhat puzzled about why Motorola's overall volumes were not higher; the company probably has gained a bit on Nokia in China and India, where Nokia still reigns supreme. If the developing-market pop wasn't enough to offset the problems Motorola faces in affluent markets, what about Nokia?

Nokia's fortunes in the second half of 2006 may well hinge on W-CDMA sales. The company has been steamrolling rivals like LG in the 3G market even as the challenger brands gain ground in the GSM market. I don't think the W-CDMA market has enough momentum yet to fully offset Nokia's GSM midmarket woes.

But Nokia's share price currently reflects deep investor skepticism. Motorola shares have outperformed Nokia's based on the assumption that the gap between the companies will continue shrinking. The volume weakness of Motorola now lowers the bar for Nokia considerably. By selling just 4 million units more in the third quarter than it did during the second, Nokia could claim to be pulling away from Motorola again.

I'm expecting a troubled third quarter from Nokia. But after the Motorola results, the possibility of a rebound in Nokia shares even after mixed numbers is now higher. Investors are not happy about Nokia's current product line, but the W-CDMA market is growing inexorably, and in 2007 that will work in Nokia's favor.

At time of publication, Kuittinen had no positions in the stocks mentioned, although holdings can change at any time.

Tero Kuittinen is a senior product specialist for Nordic Partners, Inc., a pan-Nordic brokerage firm. Although Kuittinen is an employee of Nordic Partners, Inc., the statements above are being made in Kuittinen's personal capacity and are in no way are the statements of Nordic Partners, Inc., nor attributable to the company. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Kuittinen appreciates your feedback;

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