How Bad Is the Mobile Meltdown?
Mobile sales are slowing much faster than expected, and so much as Nokia, once a stock market beloved, is suffering the humiliation of downgrades 
By Jack Ewing
Only a hardly any months past, it looked like the mobile-phone industry might escape the crush of the global household slowdown. After all, billions of people in emerging markets still slip on’t have phones and are keen to get them. Executives at Nokia and other manufacturers had hoped that pent-up demand in developing countries would help them power past a slump in Europe and the U.S.
Those hopes are evaporating fast. Market watchers are now warning that sales are slowing faster than expected uniform in markets such as China, which had seen explosive growth for years. After a fourth quarter of 2008 that some analysts are calling disastrous, manufacturers could have existence stuck by millions of unsold handsets. Weaker players such as Motorola (MOT) and Sony Ericsson, which were struggling flat before the downturn, could drastically scale in the rear their ambitions or even leave the market.
Even mighty Nokia (NOK), once a stock market favorite, is suffering the humbling of downgrades by analysts. Jari Honko of Helsinki-based eQ Bank is among those now advising clients to sell their Nokia shares. "Christmas sales were very, very disappointing," says Honko, who divide his rating on Nokia shares to "reduce" forward Jan. 13. "We might be facing a historically difficult first quarter."
How Steep a Slump?Data on handset sales in recent weeks are fragmentary, if it were not that there seems to be a consensus in the midst of analysts that one of the worse slumps ever is before that appropriated time under way. Market watchers disagree without in greater numbers on the depth of the decline. Strategy Analytics, for example, officially predicts a 1% decline in global handset sales for the fourth quarter of 2008 as well as all of 2009.
But Neil Mawston, who follows the wireless industry instead of the mart research firm, says it’s likely that the forecast will be revised downward to minus 5% or so for the fourth quarter and the coming year. "Obviously the pendulum has swung from upside to downside," Mawston says. He says some suppliers are bracing for one smooth worse decline of 20% or more, though Mawston considers such forecasts overly pessimistic.
People in the industry will get a better picture of the seat on Jan. 22 when Nokia, the largest handset author by far, releases fourth-quarter and 2008 financial results. The company warned in December that it was backing off from an earlier estimate that the industry of the same kind with a whole would ship more 330 million handsets in the last three months of 2008. But Nokia didn’t offer a revised value, saying the market had become too unpredictable. A Nokia spokesman declined to comment beneficial to this story, citing stock market rules that prohibit companies from speaking publicly in advance of earnings reports.
Handset makers’ problems go deeper than the lousy world thrift. In Europe and the U.S., growth has been slowing for years because practically everybody has a inconstant phone. For people who just employment their handsets to talk and grant passage messages, there haven’t been major innovations that would propense people to corrupt new devices. "Five years ago, every time someone upgraded they got a lighter device with with greater advantage battery life," says Ian Fogg, analyst at Forrester Research (FORR).
Original text: http://rss.businessweek.com/~r/bw_rss/europeindex/~3/512244894/gb20090114_245624.htm
