Phone makers bullish on 2nd half despite weak economy
SINGAPORE (Reuters) - South Korean cellphone makers and Swedish-Japanese rival Sony Ericsson forecast robust handset sales, defying worries that a slowing U.S. economy and record oil prices will hurt consumer demand.
LG Electronics (066570.KS), the world's fourth-largest phone maker, said on Tuesday it expected second-quarter handset sales to grow 20 percent from the first quarter, while no. 2 Samsung Electronics (005930.KS) maintained its 2008 handset sales target.
No. 5 player Sony Ericsson (6758.T) (ERICb.ST) also struck a bullish note, citing a return to normal inventory levels after a slow start to the year.
"There are some obstacles in the worldwide economy, like high oil prices, but our sales have been steady and we expect our second-quarter sales to rise 20 percent from the first quarter," Jae Bae, president of LG's Mobile Communications division for southeast Asia, told Reuters in an interview.
"We are very confident of achieving our sales target of 100 million phones this year and we will aim to exceed that target."
Samsung Electronics, which trails market leader Nokia Oyj (NOK1V.HE) of Finland, said it expected the overall mobile market size in 2008 to be about 1.2 billion units, a 9 per cent increase from 2007.
"Of these, we aim to achieve sales of 200 million units, a 25 per cent increase from the 161 million units sold in 2007," Youngcho Chi, of Samsung Electronics' Mobile Communications division, told Reuters in an emailed reply to questions.
Sony Ericsson kept a 10 percent growth forecast for the global handset market this year.
SHORT-TERM ISSUE
"We had a slightly slower start to the year due to some economic downturn in western Europe and due to overstocking in channels in Q4, which meant inventories were higher going into 2008. That was a short-term issue," Sony Ericsson's head of global marketing James Marshall told Reuters in an interview.
"Projections for this quarter and the second-half of 2008 look strong -- that's why we can keep the 10 percent growth projection," he added.
Marshall said industry growth would be driven by replacement demand as well as expansion in markets outside western Europe and North America, such as Latin America and Asia Pacific.
The joint venture company unveiled five new handsets on Tuesday including two entry-level products for developing markets and Marshall said a component shortage that plagued the company's sales in the first quarter appeared to be solved.
"There's no shortage on any one particular component," he said. "But ... with the different manufacturers depending often on the same components from different suppliers, I'm sure that (shortages) will continue to happen," he said, adding component prices were "fairly stable".
Slower sales and a shortage of liquid-crystal displays (LCDs) hurt Sony Ericsson's first-quarter results and the company said the component shortage would continue into the second quarter.
The company, owned by Japan's Sony Corp (6758.T) and Sweden's Ericsson (ERICb.ST), had been jockeying for third place in the global handset race before its first-quarter results.
LG, which sold a record 24.4 million phones in the traditionally weak first quarter, expects to ship some 29.3 million in April through June.
Bae said LG's second-quarter handset sales had been driven by its Viewty touch-screen phone which sports a five-megapixel camera and its slim slider phone called Secret, which made its debut in European markets a month ago.
(Editing by Neil Chatterjee and David Holmes)
