Tuesday, July 18, 2006

Analysts waffle on handset projections

RCRNews.com writes about the various analyst projections for global mobile handset shipments. "In May, a number of analysts and vendors raised their estimates of global handset shipments," but now "both market and financial analysts are citing an apparent easing in "end-demand," as consumers' retail purchasing patterns are dubbed."

According to the article, "the consensus on the cause is by no means unanimous, but several analysts cite the continuing robustness of new subscribers in emerging markets, while suggesting that mature markets such as the United States and Europe may be sated and are awaiting the release of new models to spark their voracious appetites."

Many analysts still think that the "two juggernauts in handset sales - Nokia (NOK) and Motorola (MOT) - remain on target and likely will increase their market share and their long-term share of industry profitability. That implies, of course, that someone is going to get hurt, but most vendors' earnings for second quarter are yet to be announced and, indeed, weakness in the market might not be immediately apparent in any one company's results."

Jeffrey Schlesinger at UBS recently wrote that "handset shipment volumes were likely to hit UBS' estimate of 955 million handsets, but that the upward momentum in end-demand seen at the beginning of the year has waned. The UBS' projection model would be revised to reflect an upturn in new subscribers in emerging markets and a downturn in replacement estimates in mature markets."

Ittai Kidron at CIBC World Markets issued a note that said, "unseasonably strong sales in the first quarter may have led to a bit of over-exuberance in industry estimates." Kidron "shaved back his firm's annual projections from 970 million units to 960 million units as a result. The bulk of the adjustment would come in second-quarter shipment volumes, now estimated at 228 million units, vs. earlier estimates of 235 million units. Kidron wrote, "We remain comfortable with our Motorola and Nokia targets, although our channel checks show some moderation in the low end."

Phil Cusick at Bear Stearns wrote: "We are concerned about the softness in the handset market in Q2 and that some of the key mature markets appear to be slowing somewhat. Despite this, we retain our positive stance on Nokia and Motorola."

Neil Strother at NPD Group thought that "a glut in options for consumer electronics purchases could well be contributing to any slowdown in mature markets such as the United States."

Carolina Milanesi at Gartner, believed that "since the beginning of the year her firm has been somewhat skeptical of the robust projections for handset shipments, though it too projected 960 million units for the year-the same as CIBC's recent, dampened reassessment. That skepticism was two-fold: could component suppliers meet the roaring demand, and would demand, in fact, remain as strong as initially projected?"

Regarding the cause of slowing growth in the United States and Europe, Milanesi said that "people are just waiting for new products to come to market. Everything is still in line with expectations."