Cellphone market gloom spreads to Samsung

SEOUL/HELSINKI (Reuters) - Samsung Electronics on Monday warned on cellphone market growth this year and next, the latest sign that weaker consumer confidence is hitting the wireless sector around the world.

Men walk past an advertisement for Samsung Electronics' phones in Seoul, April 25, 2008. REUTERS/Lee Jae-Won

“The actual global market growth on a unit basis could come short of our initial forecast for 9 percent growth (in 2008),” James Chung, a spokesman for Samsung, told Reuters.

“As for next year, it is possible that the market could post a single-digit or even negative growth,” Chung added.

Samsung’s gloomy outlook echoed the warning issued on November 14 by top handset maker Nokia Oyj that the world’s mobile phone market would fall in the fourth quarter and next year as an economic slowdown crimps consumer demand.

“At the moment it’s all doom and gloom for several quarters,” said CCS Insight analyst Geoff Blaber.

In addition to weakening consumer demand, telecom operators in developed markets have cut subsidies, further increasing the problems.

“Handsets are essentially far more expensive than they were four months ago. That just makes the situation worse for everyone in the value chain,” Blaber said.

Samsung’s comments were made after the close of trade in Seoul. Nokia shares were up 2.5 percent at 10.25 euros in Helsinki, underperforming 3.7 percent firmer technology sector index.

Last week Salcomp, the world’s largest handset charger maker, warned its 2008 sales would fall from a year ago. The firm, which supplies chargers to all top vendors, said its clients have continued to clearly cut sales forecasts each week.

“More negative news is coming all the time, the situation is turning worse all the time,” said Martti Larjo, analyst with Nordea in Helsinki.

Samsung issued its 9 percent global handset growth forecast in June, and until now had refrained from issuing any forecast regarding 2009.

Reaching 9-percent market growth would mean a 6-7 percent annual rise in the fourth-quarter, which analysts said was almost impossible in current economic situation.

“The market will certainly be down year-on-year in the fourth quarter,” said Nordea’s Larjo.

Handset makers had remained relatively unscathed by the global economic crisis this year, but successive warnings from Nokia, Qualcomm and Intel signal a rapid deterioration of consumer electronics demand.

Reporting by Marie-France Han; Editing by Alex Richardson