Cell phone industry seen facing more trouble

May 21, 2009

A recovery in cell phone demand will not happen until well into 2010, researcher Gartner said on Wednesday, while Reuters data showed the industry could suffer its worst quarter ever in April-June.
The handset market fell 9.4 per cent in the first quarter of 2009, Gartner said, adding it saw demand stabilising but it would not be until next year before demand would grow again.
‘We do not expect demand to get better before second half of 2010,’ said Gartner analyst Carolina Milanesi.
A Reuters poll of 34 analysts forecast handset vendor phone sales in the April-June quarter to slump 14.5 per cent, with 2009 sales forecast to slide 10.3 per cent.
Several companies and analysts have said the worst could well be over for the industry after the first quarter drop, as the fall was partly caused by retailers selling stockpiles of older phones.
In the first quarter, handset vendors sold 14.3 per cent fewer phones than a year ago, according to research firm CCS Insight, with the world’s top cell phone maker Nokia reporting its first-ever quarterly pre-tax loss.
Gartner, which tracks changes in inventory and actual sales to consumers, said retailers sold some 25 million phones from inventories in the first quarter.
It said it expects inventory reduction to continue in the second quarter, but at a pace of some of 10-12 million phones.
‘Although inventory has diminished there are still no clear signs of an improvement in consumer demand,’ said CCS Insight analyst Geoff Blaber.
Global Crown analyst Tero Kuittinen said he expects phone sales in the second quarter to rise 5 per cent from the first, but mostly due to the inventory change.
‘Trends in the key UK and Spanish markets remain worrisome; and consumer behaviour across Europe continues shifting. People exiting 18- or 24-month plans drift towards prepaid phones or cheap monthly plans,’ Kuittinen said.

Courtesy of Reuters/Bdnews24.com . Paris

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