January 17, 2011 / 10:36 AM / in 7 years

Smartphones lift Apple and Samsung in quarterly phone bonanza

HELSINKI/SEOUL (Reuters) - Hot smartphone models, the iPhone 4 and Samsung’s Galaxy S, are forecast to have helped their makers race further ahead of rivals in the holiday sales season at the end of 2010.

On average analysts expect global cellphone sales volumes to have grown 10.8 percent in October-December, a Reuters poll of 32 banks, brokerages and research firms showed.

“Indications point to further substantial strengthening of demand in the fourth quarter,” said Geoff Blaber, an analyst at research firm CCS Insight.

The phone market has recovered from a slump in 2009, but growth is expected to have peaked in the first half of 2010, with further slowdown, to 8.4 percent, forecast for 2011, the Reuters poll showed.

“In 2010 we saw a gulf emerge between winners and losers which will only widen in 2011,” Blaber said.

Among the largest phone makers reporting their December quarter earnings in the next two weeks only Apple and Samsung Electronics are expected to win further market share, with all others seeing their share shrinking.

Apple, the first cellphone vendor to unveil its December quarter earnings, will report on January 18, while Samsung is scheduled to wrap the cellphone industry reporting season on January 28.

Sony Ericsson is due to report on January 20. LG Electronics and Motorola report on January 26, with the largest phone maker Nokia due on January 27.

Despite slowing demand in the PC industry, all comments from vendors point to strong cellphone demand at the end of the year.

The market for phones tends to jump 10-15 percent in the fourth quarter from the third quarter, as many consumers buy the latest gadgets for Christmas gifts.

Overall market growth is expected to slow to 8.4 percent this year, the poll showed, from 13 percent last year, when the industry growth benefited from weak comparison data in 2009.

STRONG HOLIDAY

Taiwan’s HTC Corp, the world’s number four smartphone brand, said on January 6 both its December sales and fourth-quarter net profit more than doubled after consumers lapped up smartphones running on Google’s Android software.

The bet on Android has helped HTC to become one of the winners in 2010 and investors bought into the company’s bright earnings prospects, pushing the stock 160 percent higher over last year.

Number two U.S. operator AT&T Inc saw “seasonal pickup in demand” in the fourth quarter, a senior company executive said earlier this month.

Blackberry-maker Research In Motion last month reported net profit for its September-to-November quarter jumped 45 percent, beating analyst expectations, and forecast strong results for its holiday-season quarter.

On the other end of the market, helped by booming demand for cheaper models, China’s ZTE Corp told Reuters it sold 60.2 million cellphones last year, 34 percent more than a year ago.

ZTE has been able to grow its sales in emerging markets -- traditionally a stronghold of market leader Nokia -- but one of its first successful smartphones, ZTE Blade, topped sales lists also in Nokia’s homeland, Finland, in December.

KOREA‘S SMARTPHONE FOCUS

The Galaxy S smartphone, which hit 10 million unit sales mark early this month, is set to lift Samsung’s results.

It expects smartphone sales will more than double this year to at least 50 million handsets as it manufactures new models of Galaxy S, and other new models.

Samsung’s home rival, LG Electronics, is expected to report another quarter of heavy losses in its phone unit, due to a weak lineup and rising marketing costs from propping up faltering sales of its cheap and aging models.

Sales of almost 3 million mid-range Optimus One phones have been one of the few brightspots -- and it wants to focus on premium range this year to turn to profits and compete with the iPhone and Galaxy S.

It wants to increase its smartphone shipments fourfold this year to around 30 million handsets, helped by the new Optimus 2X, world’s first smartphone to use dual-core chip.

Dual-core chips, which pack more processing power than the current single-core models, are expected to be one of the key trends in smartphone industry in 2011.

But toughening competition could slow its recovery as Verizon Wireless, LG’s biggest client in the U.S. market, will start to sell the iPhone next month.

“LG depends heavily on Verizon for handset shipments but it is likely to switch to other operators such as T-Mobile an AT&T, and launch aggressive marketing to mitigate the impact,” said Kwon Sung-ryol, an analyst at Dongbu Securities.

(Editing by Sharon Lindores)

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