Analysts warn of worsening handset outlook in 2009

Analysts warn of worsening handset outlook in 2009

A Reuters poll of analysts has further fuelled concerns that mobile handset sales will shrink significantly next year, and could see vendors stacking-up a backlog of unsold phones. The poll of 36 analysts forecast an average 6.6 percent slowdown in the market in 2009 coupled with a 5.7 percent decline in the current quarter, traditionally the strongest due to Christmas sales. A similar poll in November had forecast that the market would rise 2.6 percent in 2009. But a series of warnings from vendors since then - including a second device sales warning from the world's largest handset vendor, Nokia, earlier this month - appears to have made analysts more pessimistic. Only two analysts polled by Reuters this week now expect growth in the sector next year. "Fear and uncertainty are causing many suppliers and consumers to delay purchasing their next handsets," said Strategy Analytics' Neil Mawston.

Analysts warned that the slowdown could see handset vendors build-up large inventory backlogs, just as they did during the similar downturn in the mobile devices market in 2001. "A number of vendors look set to try and reach targets set at the start of the year in a very different climate," said CCS Insight analyst Geoff Blaber. "That could result in a significant oversupply moving into the first quarter." LG Electronics and Samsung are considered most at risk of building up inventories, having set annual sales targets of 100 million and 200 million phones, respectively, analysts said. The gloom in the handset sector was exacerbated this week with the news that UK electronics group Laird - a component supplier for Nokia and others - is to reportedly shed 5,000 jobs, nearly half its staff, as it sees global handset volumes declining 10 percent next year.