A subdued tone for cell phone makers

The communications market is still waiting to see a little daylight.

Although a few companies are reporting signs that business is improving, most makers of cell phones and related equipment are showing little indication of a turnaround. Sales of handsets are growing, but not by much, while handset makers continue to slow down spending on network improvements and expansion. Still, there are some signs of hope. Carriers, for instance, are turning to network equipment makers for the switches and other gear needed to add Wi-Fi wireless networking to their mix of service offerings. And the public continues to demand more bandwidth as Internet traffic grows.

Both Nokia and Motorola braced the market for bad news about cell phones back in June, when both lowered their forecasts for the quarter. Ericsson is expected to report yet another quarterly loss, dragged down by flagging sales of a handset joint venture with Sony. The three have cited various reasons for failing to turn around a nearly three-year dip in handset and infrastructure sales. A remaining concern is the SARS epidemic in China, which has slowed one of the few bright spots in the otherwise slumping wireless sector.

"Managements' tone was definitely subdued," during recent conference calls, Deutsche Bank analyst Brian Modoff told clients Monday. "We don't expect them to suddenly reverse their position and become more positive on their second-half outlook for the entire industry." Motorola, the world's second-largest cell phone provider, will report quarterly earnings on Tuesday. Motorola is exected to report a break-even quarter, with sales of handsets, chips and network infrastructure equipment of between $6 billion and $6.2 billion.

Nokia, the No. 1 seller of handsets , is expected on Thursday to report a profit of 17 cents per share on $8 billion in revenue. That represents a 3 cents per share dip from the previous quarter's numbers.

News source: C|net

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