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Third quarter handset shipments hit 101 million

According to Strategy Analytics' update on the handset market for the third quarter, revenues and shipments are flat, but the indications are that the bottom has been reached.
A new report from Strategy Analytics, Global Handset Market: Q3 2002 Market Update, says that in the quarter ending September 30, global handset shipments reached 101 million. However, despite stable profits for the major brand players they will be plagued by slower than expected shipment and revenue growth.

"It is a positive sign for the industry to see vendors remaining profitable in challenging market conditions," said Chris Ambrosio, director of the global wireless practice at Strategy Analytics. "Motorola even managed to turn its highest operating margin since 1997."

The last several quarters have been characterized by vendors maintaining profit levels amid lower than expected volumes. Strategy Analytics believes that the third quarter of 2002 represents the bottom of a trough in demand.

"ASPs remained stable in the third quarter, as feature-rich handsets begin to make their entrance into CDMA and GSM markets," said David Kerr, VP of Strategy Analytics global wireless practice.

Samsung and LG are managing to buck the industry trend however. "Samsung has paired strong CDMA performance with steady GSM growth to increase annual shipments by 62%. LG Electronics grew GSM shipments 60% sequentially and is on track to displace Sony Ericsson in the top 5 for the fourth quarter," said Kerr.

Other findings included in this report are that Siemens maintained handset profitability on shipments of 7.8 million units, up 13% from Q3 2001, and Motorola’s surging CDMA and TDMA shipments were offset by a poor GSM performance mainly in Western Europe.

* According to a report from the Reuters news agency, Samsung is predicting that world-wide demand for handsets will be 410 million units in 2002 and 435 million in 2003. Samsung has been relatively conservative with its handset forecasts in the past and CIBC World Markets is predicting 473 million units for 2003.

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