PREVIEW-Handset industry Q1 very weak, eyes on outlook

* Sales fall by more than 50 mln phones - poll

* Nokia expected to post worst quarter in over 7 yrs

* Samsung, LG expected market share winners

By Tarmo Virki, European technology correspondent

HELSINKI, April 8 (Reuters) - Cellphone sales in the first quarter fell by
more than 50 million handsets, or 18 percent, putting world No. 1 maker Nokia
(NOK1V.HE) on course to report its worst results in seven years, Reuters polls
showed on Wednesday. [ID:nL7450021]

Shops were left stranded with tens of millions of unsold phones after a
lacklustre Christmas season and retailers faced tight credit markets which
limited their buying power.

For the January-March quarter, the industry is expected to report sales down
18 percent from a year earlier to 241.7 million phones, a Reuters poll of 35
analysts showed.

For the full year, the phone market is expected to struggle as consumers cut
spending on new gadgets, with vendors selling 11.4 percent fewer phones than in
2008.

"Destocking in the sales channel and a lack of credit continues to adversely
impact the handset market. However, we still expect to see a slow improvement in
the second half," said CCS Insight analyst Geoff Blaber.

"It's likely that the first quarter really was the volume bottom for the
industry," said GC Research analyst Tero Kuittinen.

SMARTPHONES SHINE

Analysts said one focus would be on how much inventory remains in sales
channels, as well as on signs of demand for smartphones, which are one bright
spot in the market.

Sales of smartphones such as Research In Motion's (RIM) (RIM.TO) Blackberry
are expected to rise some 10-20 percent.

The focus in the phone market this year has shifted increasingly to
smartphones, as operators move subsidies to support consumers buying the
feature-packed devices, which can generate more data revenue.

RIM, the world's second-largest maker of smartphones, surprised investors
last week with a strong profit report and a rosy outlook.

Nokia is set to report January-March results on April 16, followed by Sony
Ericsson on April 17, LG Electronics (066570.KS) on April 21 and Motorola on
April 30. Samsung Electronics (005930.KS) has not given an earnings release date
yet.

KOREANS TO GAIN SHARE

Korean firms are expected to have gained market share in the quarter, with
Samsung's volumes off just 4 percent, while No 3 phone producer LG is seen
gaining share despite a 14-percent drop in its volumes.

"Samsung and LG will show strength and market share gains throughout the
year. They have the advantage of brand power, favourable currency and a good
lineup of models," said analyst Harrison Cho from Mirae Asset Securities.

"Problems at Motorola and Sony Ericsson are helping," Cho said.

Sony Ericsson warned on March 20 of a heavy loss for the quarter and said it
would sell barely half of the phones it sold in the previous quarter.

Motorola, which has struggled in vain for years to match the success of its
Razr model, has forecast a loss for its phone unit in 2009.

Motorola's phone sales volume is expected to plunge 47 percent in the first
quarter, with Sony Ericsson sales seen
down 37 percent and in line with its March 20 warning, the Reuters poll showed.

Sony Ericsson is expected to report a quarterly net loss of 291 million
euros, a separate poll showed, with its 2009 net loss seen at 810 million and
2010 also in the red. [ID:nL8652549]

NOKIA

Sector leader Nokia is expected to report its lowest quarterly earnings in
more than seven years, a Reuters poll of 32 analysts showed. [ID:nL8308467]

On average, Nokia's earnings per share (EPS) is expected to fall to 0.06
euro, its weakest level since the third quarter of 2001.

Nokia's market share is seen falling to 37.4 percent in the quarter from
39.2 percent a year earlier.

Its shares fell by 20 percent over the quarter, with the Finnish firm
slashing jobs and reining in production to counter sluggish demand.

Group revenues are seen shrinking 14.7 percent this year, and rising 2.8
percent in 2010.

(Additional reporting by Marie-France Han in Seoul and Brett Young in
Helsinki; Editing by Jason Neely)