Handset market growth slows

Tag : Cellphone Charger

HELSINKI — The global economic slowdown has started to crimp demandfor new cellphones, leading top handset research house Gartner tolower its market growth forecast, and top phone-charger makerSalcomp to warn on profits.
Research firm Gartner cut its forecast for the cellphone market to10-11 per cent. At the end of May Gartner forecast 10-15 per centmore phones would be sold this year. “In the last monthhowever, the economic environment started to negatively impactemerging markets as well as mature,” Carolina Milanesi, headof mobile device research at Gartner, told Reuters on Monday.
Last year cellphone market volumes grew 16 per cent year on year.
In April Nokia, the world's largest cellphone maker, warned thevalue of the cellphone market would decline in 2008 in euro terms,meaning average prices are falling more than volumes areincreasing.
“Signals for a weaker than expected second quarter havearrived from Sony Ericsson as well as some componentmanufacturers,” Milanesi said.
The world's fifth largest phone maker, Sony Ericsson, warned onJune 27 it would make no profit in the April-June quarter due toweaker demand for its more expensive phones, and said the marketwas challenging.
“Despite expecting a stronger second half, we feel that theweakness of the first half has pulled the overall year growth downto 10-11 per cent,” Milanesi said.
SHARES
Shares in Nokia and Ericsson fell after the news, but laterreversed the losses. By 1207 GMT Nokia was up 2 per cent at 16.37euros and Ericsson up 1.2 per cent at 65.20 Swedish crowns,compared with a 1.6 per cent higher Dow Jones Stoxx technologyindex.
Salcomp, the world's top maker of cellphone chargers, warned its2008 operating profit would fall from last year's level, citingexpectations of weaker volumes during the second half of the year.
Shares in Salcomp slumped 13.9 per cent to 2.84 euros.
“As our clients have lowered their monthly forecasts for theproducts we supply chargers for, our sales growth in the secondhalf is not as fast as we expected earlier,” Salcomp ChiefFinancial Officer Antti Salminen told Reuters.
He said the firm – which supplies chargers to the top fivevendors – does not expect to lose market share to rivals inthe second half and its stocks are at normal levels, and cautionedagainst making direct conclusions about global cellphone demandfrom its warning.
Nokia will be the first of the top phone vendors to report,releasing its April-June numbers on July 17, a day before SonyEricsson. LG Electronics will report on July 21, Samsung on July 25and Motorola on July 31.
Nokia is expected to report a 16 per cent earnings rise due tostrong demand in emerging markets, yet its comments on the impactof slowing growth is likely to set the tone for its shares.
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