This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

All but Apple Brace for Phone Slump

Stocks in this article: GOOG AAPL NOK MMI

NEW YORK ( TheStreet) -- An early chill has come to the mobile phone sector.

The biggest season for phone sales is just around the corner, and a heaping buffet of beefy Google (GOOG) Androids and an enticing Apple (AAPL) iPhone or two await.

But the bountiful supply might not go with what appears to be a shrinking appetite among consumers.

Here are a few recent warning signs.

The hottest potential iPhone killer of the year -- the Motorola (MMI) Bionic -- launched Thursday at Verizon (VZ) to a very soggy reception.

Texas Instruments (TXN) -- one of the world's largest mobile chip suppliers -- slashed its sales guidance by nearly 10% Thursday.

No. 3 phone maker LG may or may not be cutting up to 30% of its unprofitable phone operations. The Korean Economic Daily reported the planned cuts, and LG responded via Reuters that no decision has been made.

The overwhelming popularity of smartphones -- on pace to reach the 1 billion-units sold mark in 2015, according to iSuppli -- would seem to defy any notion of a slowdown. But with the global economy dragging and European financial markets in turmoil, it's not exactly hard to see how there might be some cuts in consumer spending.

"We doubt that even smartphones will be spared if consumer demand does falls off rapidly as an increasing number of electronics manufacturers seem to believe," JPMorgan analyst Rod Hall wrote in a note Friday.

A slowdown in phone sales, however, isn't likely to be applied evenly across the broad field of competitors.

New Apple Crop

With its new iPhone 5 and a stripped-down iPhone 4 potentially on its way this month or next, Apple will likely have its own sales party completely detached from the woes of less popular phone makers.

Apple has one iPhone refresh every year and the iPhone 5, delayed as it may be from customary summer launch, promises a new design with a dual-core processor and a higher-resolution camera. For millions of iPhone 3 users, it will be an enticing upgrade option.

And while Apple enjoys a new product cycle, others are lost somewhere in between.

Given that Nokia (NOK) is Texas Instruments' largest customer, it would appear that orders from the Finnish phone shop continue to fall. Nokia's rebirth as a Microsoft's (MSFT) partner with Windows 7 phones is still a year away and business is almost all downhill until then.

And cheap phones, the presumed engine of future growth, might be feeling a squeeze in these penny-pinching times.

"One theory is that the feature phone market is now caving in rapidly," said independent analyst Tero Kuittinen. "Low-income households are slamming the breaks on low-end phone purchases. That could lead to weaker overall sales volumes in the second half of this year."

If true, that's certainly not the sort of holiday cheer phone makers were hoping for.

--Written by Scott Moritz in New York.

To contact this writer, click here: Scott Moritz, or email:

Follow Scott on Twitter at MoritzDispatch

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 18,053.71 +23.50 0.13%
S&P 500 2,088.77 +6.89 0.33%
NASDAQ 4,806.8590 +33.3870 0.70%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs