Analysts cut 2009 mobile phone growth estimates

NEW YORK Wed Oct 8, 2008 8:43am EDT

A woman poses next to cell phones at the 'Internationale Funkausstellung' (IFA) 2006 consumer electronics fair in Berlin, September 1, 2006. REUTERS/Tobias Schwarz

A woman poses next to cell phones at the 'Internationale Funkausstellung' (IFA) 2006 consumer electronics fair in Berlin, September 1, 2006.

Credit: Reuters/Tobias Schwarz

Related Topics

NEW YORK (Reuters) - The global mobile phone market should grow at much slower-than-expected rates next year as consumers put off buying new devices due to deepening economic concerns, according to forecasts from analysts.

While industry executives often say mobile phones are the last thing consumers will give up to save money, analysts are now citing lengthening phone replacement cycles and weakening economies around the world for their weaker sales estimates.

UBS analyst Maynard Um halved his forecast for 2009 global handset growth to 3 percent from 6 percent, pointing to particular weakness in Europe and North America.

"We continue to believe in a tight relationship between world real GDP and device volume growth," Um wrote in a research note.

He cited UBS cutting its forecast for 2009 global gross domestic product growth to 2.2 percent from 2.8 percent for his own reduced handset estimate.

JPMorgan analyst Ehud Gelblum was more optimistic, but still cut his expectations for 2009 handset growth to 6.1 percent from 8.1 percent, citing consumer reluctance to upgrade phones, particularly in Europe, and "more modest" growth in China, one of the fastest-expanding mobile markets.

Handset market leader Nokia warned early last month that the mobile phone market would be hurt by weakening consumer confidence in many markets in 2008 and the company itself would lose market share in the third quarter.

Um said fourth-quarter results from handset makers would likely show Nokia, which commands a roughly 40 percent share of the global market, is not the only one suffering.

"As we enter Q4, we believe it will become clearer that many handset vendors are struggling rather than problems being specific to Nokia," he and other UBS analysts wrote.

They pointed to Samsung Electronics Co Ltd, which trails only Nokia, and Motorola Inc, the No. 3 mobile phone maker, which has been struggling to regain its footing since the start of 2007.

"While Motorola and Samsung may gain some volume share in Q3, we believe the latter in particular will show poor ASP (average selling prices) and margin trends," the UBS report said.

(Editing by Andre Grenon)

FILED UNDER: