Handset maker Sony-Ericsson said it is having a tough time. According to The Wall Street Journal (subscription required), "the mobile-phone maker continues to be hit hard by a weakening economy in Western Europe, hurting demand for the mid- to high-end handsets it specializes in."

Of course, another big market for more expensive phones is America, Motorola's (NYSE: MOT) last stronghold. The U.S. company faces a double threat now. It does not have any "hot" model to compete with new products from Nokia (NYSE: NOK), Samsung, or Apple (NASDAQ: AAPL). Now it appears that the recession is cutting demand for phones altogether.

Motorola may already be at a place where its handset operation cannot recover. Revenue in the division is dropping rapidly, and the unit is losing money. Its share of the global market has dropped from 22% two years ago to about 12%. And, the company's stock is down to a 52-week low of $7.20, about 65% down from its 52-week high.

No matter how hard it may be for other companies in the industry, the only firms that may do well over the next year are Nokia and specialized handset makers like Apple. Nokia has about 40% of the global market and sells modestly priced phones in rapidly growing markets including China and India. Apple gets the high end of the market.

In the middle is Motorola, with barely a hope of things getting better.

Douglas A. McIntyre is an editor at 247wallst.com.

Wall Street needed some help in the tech sector after a cruel and brutal sell-down today. The champion was going to have to be big handset chip company Qualcomm (NASDAQ:QCOM).

It was not to be. The minute Qualcomm reported earnings, the stock sold off 9%.

The company posted revenue of $2.31 billion, up 15% year-over-year and down 1% sequentially. Diluted earnings per share were $0.67, up 86% year-over-year and 43% sequentially.

What appears to have upset investors was guidance. For the next quarter, revenue is expected to grow 14% to 19% to $2.3 billion to $2.4 billion. EPS is expected to rise 11% to 16%. The company also performed one of its periodic audits of the royalties payable by licensees. "Based on this new information, we now estimate shipments of 89 million handsets reported in our fourth quarter fiscal 2007, compared to our previous estimate of 92 million handsets," the earnings release said.

The guidance and little surprise seemed to be more than shareholders could stomach.

Douglas A. McIntyre is an editor at 247wallst.com.

Handset makers are tired of Apple (NASDAQ: AAPL) kicking sand in their faces with the upcoming launch of the iPhone. Several of them are launching competing products.

Nokia (NYSE: NOK), the world's largest handset company which has a global market share of 36%, has introduced (subscription required) the N95 which has both a color screen and DVD level video quality. LG Electronics has launched a slick phone called the Prada which has a touch screen not unlike the iPhone's. And, Sprint (NYSE: S) will offer the UpStage from Samsung with a retail price of $99.

The difference between most of the handset companies and Apple is that they are already selling tens of millions of phones a month. Expectations that they will do substantially better are fairly low.

The success of the iPhone means much more to Apple. Its shares are up over 100% this year to an all-time high of $123 in part because of anticipation of a monster launch for the new device.

All the competition has to do is hold its own.

Douglas A. McIntyre is a partner at 24/7 Wall St.

Observing the world of mobile phones, Jim Cramer said that handsets have been one of the greatest growth drivers around and best money-makers. He thinks the uncertainty presented by international governments just helps cell phone makers. The company that can produce the cheapest, he says, and deliver that into the third world will be the winner. He thinks that Nokia Corporation (ADR) (NYSE:NOK) can do this, and he thinks that NOK is the one to buy. He likes NOK for this reason more than he likes Telefonaktiebolaget LM Ericsson (NASDAQ:ERIC) or Motorola, Inc. (NYSE:MOT).

Cramer said they are the lowest-cost provider and they might be selling them at subsidy levels, but he thinks they are establishing brand loyalty in those markets. He thinks Nokia will have the biggest footprint out of the cellphone makers, and as their middle classes grow so will Nokia.

Do those in international markets have brand loyalty? If they go cheap now and that gets established as "the cheap intro brand" then won't the upwardly mobile go look for sa step-up? He might be right here, and he might not. The stock may even go up from here, but I would be willing to bet that it is for different reasons. We'll see.