Transition is the word of the year, according to UBS Warburg’s analysis of mobile handset sales for the first quarter and forecast for the rest of 2001.
Suppliers are struggling to sell over-stocked inventory, the wait is on for 2.5G technology, especially GPRS data applications, and consolidation has practically become an industry buzzword.
UBS reported a 2-percent growth in handsets in the first quarter, to 95 million units. Although this is lower than UBS’ original estimate of 98 million, analysts said that considering current economic conditions, the number could have fallen 10 million to 15 million lower than estimated.
Growth in handset sales in the United States appears to have stayed within predictions, at 5.5 million, while sales in Western Europe have floundered. Sales in China have accelerated to a high of 4 million to 5 million per month.
Nokia Corp. held 36 percent of market in the quarter, and it is “highly likely” the Finnish manufacturer will reach its 40-percent target by the end of this year or early 2002, UBS Warburg said. Motorola Inc., on the other hand, lost market share, falling to 13 percent. UBS Warburg blamed this on Motorola’s transitioning GSM product portfolio and said it expects the company to rebound toward the end of this year as new products take hold. L.M. Ericsson, whose No. 3 slot was recently overtaken by Siemens, fell from 9 percent to 7 percent market share. Analysts said they don’t expect that standing to improve in the foreseeable future. But as for Siemens’ jump to No. 3, UBS Warburg simply said, “time will tell.” UBS Warburg noted its analysis of Ericsson does not take into account the recently proposed Sony-Ericsson partnership, which the research firm cautiously called the best possible successful combination.
Going forward, UBS Warburg said it estimates 2001 handset sales will be between 425 million to 450 million, probably on the lower end, reduced from its original prediction of 465 million. The company also optimistically predicted that 2002 will see handset sales reach around 545 million, but said this is highly contingent on 2.5-generation services coming to fruition.
UBS Warburg currently considers Nokia and Motorola stocks buy-rated, while Ericsson’s cash-flow concerns and market share losses have moved it to hold.
