Handset sales defy global slowdown in 3Q07

Nokia nears 40% market share as entry-level handset demand booms.

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By  Administrator Published  November 3, 2007

ABI Research claims that 3Q07 financial results published by vendors such as Samsung, LG, Sony Ericsson and Nokia show that handset sales are buoyant despite a dip in global demand for consumer goods.

With Motorola yet to disclose its 3Q07 results, as CommsMEA went to press, ABI Research claims 3Q07 witnessed strong sales by handset vendors against the flow of bad news in the global economy and in the wireless infrastructure market, according to Jake Saunders, Asia-Pacific VP at the firm.

Overall ABI believes that global mobile devices vendors shipped 288 million units during 3Q07, representing a quarterly increase of 10.5% and a 15.7% annual rise.

Furthermore, this result helped the industry recover from a comparatively slow 2Q07 according to the company.

Nokia reported that a surge in demand for entry-level handsets in emerging markets helped drive the industry with its shipments topping 111.7 million units for the quarter, a 26% annual increase.

These figures translated into a market share of 39% up from 36% from the previous year. The company's overall operating margin increased 3.5% to 14.4% despite the company's average selling price (ASP) dropping US$11 annually to $117.

Korea's Samsung continued to flourish in the mobile devices segment selling a record 42.6 million units during 3Q07 with its telecommunications business netting $644 million in revenues.

Motorola's mobile devices unit saw sales revenues dip 36%year-on-year to $4.5 billion. The unit shipped 37.2 million devices, up sequentially from 35.5 million during the quarter with operating earnings of about $138 million.

Sony Ericsson however, reported a slip in its 3Q07 profit figures, earning $377.7 million compared to $325 million during the previous year, based on its efforts to push into the mid-to-low priced handset market.

LG's mobile communication company recorded sales of $2.839 billion during 3Q07 up 4% annually. Handset unit shipments also reached a total of 21.9 million thanks to increased demand in emerging markets.

Despite increased demand for low cost devices and the subsequent ASP drop from mainstream vendors, improvements in cost structure have sustained profitability, according ABI Research.

Saunders also says that most vendors are confident that 4Q07 should deliver promising returns despite some potential concerns regarding North American and European consumer confidence.

ABI Research forecasts that the global handset market will grow 13.5% year-on-year in 2007 translating to a total volume shipment of 1.13 billion.

"The most dynamic sectors within the mobile devices sector are the multimedia and corporate segments," ABI's Stuart Carlaw, wireless research director.

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