Cellphone makers can expect poor reception in 2012

Wed Jan 18, 2012 10:12am EST

Tourists use a mobile phone to take a photo of the sunset in the town of Sliema in Valletta's Marsamxett Harbour October 26, 2011.  REUTERS/Darrin Zammit Lupi

Tourists use a mobile phone to take a photo of the sunset in the town of Sliema in Valletta's Marsamxett Harbour October 26, 2011.

Credit: Reuters/Darrin Zammit Lupi

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(Reuters) - Cellphone makers are set to struggle with slow sales growth this year as a weaker global economy discourages consumers from replacing older handsets.

Fourth-quarter results are likely to show the slowdown under way. Apple's long-awaited iPhone 4S and Samsung Electronics' new, broad offering were likely the exceptions in an otherwise lackluster Christmas holiday season.

"The blowout quarter that Apple will report will show they are still the one to beat, while in the Android (operating system) camp ... only a strong brand like Samsung can stand out," said Gartner analyst Carolina Milanesi.

Apple, ousted as the world's top smartphone maker by Samsung in the third quarter, could regain the No. 1 spot as consumers rush to buy the latest iPhone. It had been 16 months since the previous model went on sale.

Sony Ericsson kicks off the cellphone industry's reporting season on Thursday, and analysts expect it to report quarterly sales fell 6 percent from a year earlier to 10.5 million phones.

Sony agreed to buy out Ericsson's stake in the venture last October.

Taiwan's HTC, BlackBerry maker Research In Motion and Motorola Mobility have warned of weak sales in the holiday season, a key period when many consumers replace their models.

PRICE EROSION

Vendors are expected to report sales of around 142 million smartphones in the October-December quarter, up 42 percent from a year ago, according to a Reuters poll. But analysts said not everyone benefited.

"We expect smartphone demand to have remained robust in the fourth quarter, but price erosion is intensifying. Profitability remains the crucial yardstick and it's likely Apple and Samsung extended their lead," said CCS Insight analyst Geoff Blaber.

Apple is expected to have sold 27.8 million of its highly profitable iPhones in the quarter, up 72 percent on a year ago.

Samsung said last month its handset sales set an annual record by the end of November, boosted by good demand for its flagship Galaxy S II smartphone.

Its overall cellphone sales for the quarter are seen rising 16 percent from a year ago to 94 million, short of Nokia's expected sales of 115 million.

Last week Samsung said it would outsell Nokia in 2012, but analysts on average expect the Finnish company to remain ahead.

Investors will be scrutinizing Nokia's results for signs of whether its new Windows Phone models in conjunction with Microsoft will help stem market share loss, although most of its smartphones are powered by old Symbian software.

Analysts expect Nokia's fourth-quarter smartphone sales to be down 33 percent from a year ago to 18.7 million handsets, mainly due to the massive decline in sales of Symbian-operated models.

Still, that would be well ahead of HTC's 11 million and RIM's 13.7 million.

Apple is scheduled to report quarterly results on January 24, Nokia on January 26, Samsung on January 27 and LG Electronics on February 1.

(Editing by David Hulmes)

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