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By ELAINE KURTENBACH,AP Business Writer AP - Wednesday, March 18SHANGHAI - Asia's stock market rally seemed to be running out of steam Wednesday, despite an
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Credit: Reuters/Truth Leem
By Tarmo Virki, European Technology Correspondent
HELSINKI |
Wed Oct 12, 2011 9:41am EDT
HELSINKI (Reuters) - Investors will look to handset vendors' quarterly reports in coming days for signs of how much the global economic slowdown will hit cellphone sales in the crucial year-end shopping season.
While the outlook for consumer spending has worsened in recent weeks, analysts have changed their fourth-quarter cellphone sales forecasts only slightly, with a Reuters poll showing they expect a historically normal 12 percent quarter-on-quarter rise.
Surging demand for new smartphone models has driven sales growth for the cellphone industry in the past few years, recovering from a sharp downturn in 2008-2009 when the financial crisis hurt consumer spending on gadgets.
Analysts are betting on strong sales of latest models from the likes of Apple Inc, HTC Corp and Samsung Electronics Co Ltd will balance out a weaker outlook for smartphone laggards Nokia Oyj and LG Electronics Inc.
"As consumers are pushed to justify their purchases they demand more from vendors, either from a hardware perspective or experience perspective," said Gartner analyst Carolina Milanesi.
Despite fears of recession and lukewarm reviews, orders for the latest iPhone model surpassed 1 million in the first 24 hours, beating Apple's previous one-day record.
Samsung Electronics and HTC, both of which have benefited from their focus on Google Inc's Android software, have said they had a strong quarter.
Samsung said on October 7 its quarterly profit should top the most bullish market forecasts, with smartphones becoming its main profit engine and establishing it as No. 1 in the segment ahead of Apple.
HTC said on October 6 its net profit rose 68 percent in the quarter as demand for its gadgets stayed strong.
MURKY CHRISTMAS
Despite expectations that new models from key vendors will drive sales in October through December, there is some concern that achieving the market's consensus forecast of 12 percent growth will be difficult given the global trend of slower gadget sales.
"Looking at Europe and North America overall, the outlook is murky," Masaru Kato, chief financial officer of Sony Corp, which makes electronics products ranging from tablet PCs to TVs, told Reuters on Tuesday.
"We don't see any reasons for optimism," he said.
Kato declined to comment on negotiations between Sony and Sweden's Ericsson in which the Japanese firm is seeking to buy out its 50:50 partner from the phonemaking venture which has struggled to make profits and has dropped to No. 9 in the global cellphone rankings.
Sony Ericsson is the first of the phone makers to report full results when it unveils numbers on October 14.
The ownership pact is up for renewal for the next five years this month, and with Sony seeking full ownership the deal could be unveiled the same day.
Analysts said the joint venture is likely to be among the worst performers in this downturn, alongside already-struggling Nokia, LG and Research In Motion Ltd.
"The other smartphone manufacturers, such as Motorola, RIM and LG, could be at the highest risk, as their decline could be further accelerated by a downturn in the market," said analyst Nick Dillon at consultancy Ovum.
Neil Mawston from Strategy Analytics said it was all about having, or not having, the right products. "Device vendors with sub-optimal product portfolios, such as RIM or Nokia, could face challenges if a mobile recession temporarily returns," he said.
"Western Europe, which is a saturated mobile market with tough economic challenges, looks the region most vulnerable to a slowdown at the moment."
Western Europe has been the last stronghold of Nokia, still the world's largest cellphone vendor by volume, but whose sales and profits have shrunk fast.
Nokia is expected to report a rare loss for the third quarter when it unveils results on October 20, but investors are also looking forward to the following week, when the firm is set to unveil its first smartphones using Microsoft Corp software.
LG, which has also been slow to refocus on smartphones, suffered five consecutive quarterly losses from handset sales and is set to report a wider loss for the September quarter later this month due to a lack of attractive high-end models.
(Editing by David Holmes)
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