Analyst cuts forecast for handset growth to 6%: Consumers, under pressure, stretching replacement cycle

Analyst Brian Modoff at Deutsche Bank this week cut his forecast for global handset shipments from 8% growth to 6%, citing fuel and food cost pressures on consumers.
Modoff said that those financial pressures were causing consumers to delay handset upgrades, weakening the outlook for global volume growth.
The analyst had begun the year with a projection of 11% growth. The analyst cited “the economic slowdown in the United States and weakening demand in Europe.”
Piper Jaffray analyst T. Michael Walkley also lowered his forecast for global handset volume growth to 10%, less than his previous forecast of 11.5% growth on “soft sell-through trends” in North America and slowing demand in China.
Both analysts’ reduced outlooks were first reported by Barron’s.
Also this week, The NPD Group said it found a 20% decline in year-over-year handset purchases by U.S. consumers between January and April. NPD suggested that wireless retailers more aggressively pursue accessories to make up for possible lost revenue.
The analysts’ change in forecast contrasted with recent statements from at least two major wireless players, Nokia Corp. and Brightpoint Inc.
Nokia Corp. recently reiterated its own estimate for 10% shipment growth this year, when it delivered its first-quarter earnings in mid-April. No doubt the industry will be watching closely for any change in that forecast when the Finnish giant reports on second-quarter earnings in mid-July.
Brightpoint Inc. said this week it stood by its own forecast for 9% to 10% annual growth in handset shipment volumes this year over last year. CEO and Chairman Bob Laikin said that August typically offered the most visibility into the year’s handset volume shipments because that is when inventory begins shipping to retailers for the critical fourth quarter.