An UnMerry Xmas For the Tech Sector?

Posted by: Jennifer L. Schenker on September 10

Despite the economic downturn, tech companies are still counting on Christmas to give the usual boost to their fourth quarter results. But some analysts are projecting a gloomier outcome this year for vendors of notebook and desktop computers, TVs, and mobile phones.

Analysts in the London office of brokerage Dresdner Kleinwort issued a note Sept. 10 saying that the worst is still ahead for the semiconductor industry, which supplies the components for the electronic gizmos consumers love to buy. Dresdner is now predicting an inventory correction and decline in semiconductor revenues in 2009. This could lead to downgrades of earnings forecasts, the note says, meaning there could be significant weakness ahead in the share prices of European semiconductor companies.

The reason? Consumer demand for LCD TVs, computers, digital cameras, MP3 players, and navigation devices has slowed, with no recovery expected in the medium term, Dresdner Kleinwort says.

The mobile phone business is no exception. The global market for handsets may grow less than 10% this year, down from 12% in 2007, Dresdner says, and slower sales are likely to continue into the first quarter of 2009.

Not everyone is so pessimistic about the handset business. True, the annual unit growth rate for mobile phones has been slowing and could be only 8% next year. Still, mobile consultancy Strategy Analytics has predicted 13% market growth this year and it is sticking by that forecast.

Analyst Neil Mawston says he expects Samsung and LG Electronics to report 20% or more growth for the year. RIM, the maker of the popular Blackberry, is expecting double-digit growth, and Apple will undoubtedly report strong sales of its iPhone. So the companies that have the right products at the right price may still manage to ring in a happy holiday, Mawston says.