Recession to hit Nokia and Sony Ericsson sales - iPhone unaffected

While the cellphone industry has largely sailed through previous market downturns, this latest turbulence looks set to hit both Nokia and Sony Ericsson hard, but leave Apple and its iPhone untroubled. Nokia seems likely to provide the biggest surprise when analysts expect the company to report its lowest quarterly revenue growth since 2004 later this week. The firm warned the market in April that the value of the cell phone market would decline in 2008 in euro terms, meaning average prices are falling more than volumes are increasing. Sony Ericsson, ranked as the #5 mobile phone maker, may report that second-quarter profits have been almost wiped out on declining sales of higher-priced handsets and delays to new products. The market expectation is that the JV will announce a significant decline in the Q2/07 profit number of €220 million, perhaps close to zero, with sales figures falling by around 10 per cent.

Gartner says it now expects overall handset growth to top out at 11 per cent for the year, down 4 per cent on the 15 per cent growth forecast it made earlier in the year when the economic outlook was somewhat rosier. Carolia Milanesi, a Gartner analyst, said, "The economic environment has started to negatively impact emerging markets as well as mature ones. Despite expecting a strong second half, we feel that the weakness of the first half has pulled the overall year growth down to 11 per cent." The lone bright spot, of course, is Apple, which released the new 3G version of its iPhone on Friday and sold 1 million units in the first three days. Many wireless analysts now predict that Apple will sell 10 million of the new devices by the end of the year. ABI Research predicts that handset sales for all companies will improve during the second half of this year, boosted by impressive product launches such as the recently launched iPhone 3G and the Samsung Omnia/Instinct.

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