Wireless-equipment vendors got whacked Friday by a Wachovia Securities survey purporting to show disappointing consumer demand for replacement phones heading into the holiday shopping season.
"Overall demand appears to have dropped as precipitously as it did this time last year, which presaged a weaker-than-expected Christmas selling season," analyst Mark Roberts said in a report. "November 2001 is the only month during the observation period that experienced lower anticipated demand for replacement handsets."
The cellphone industry has pinned its hopes for a rebound on a belief that users are getting tired of their old phones and will snap up a new generation of models that operate on high-speed networks.
But that didn't seem to be the case in Wachovia's findings in a survey of handset buyers in the U.S., South Korea and Europe, three of the wireless industry's largest markets. Roberts slashed ratings across the board, lowering
to sell from hold, and dropping
RF Micro Devices
to hold from buy.
Wachovia also separately surveyed 28 retailers in the U.S., Canada and the U.K. and said, "Not one manager showed exuberance towards the handset market during the interviews."
Ericsson's American depositary receipts fell a nickel, or 0.44%, to $11.19. Shares of Anadigics, which manufactures cellphone radio-frequency chips, fell a nickel, or 1.56%, to $3.16. RF Micro Devices stock fell 24 cents, or 2.17%, to $10.83. Shares of Skyworks, which manufactures wireless chips, plunged 60 cents, or 5.19%, to $10.95. TriQuint gained 2 cents, or 0.28%, to $7.08.
Although sales do not typically surge in the cell-phone industry until late into November, when carriers begin to heavily promote its services, October sales have traditionally been used by Wall Street as an indicator of what's to come in the holiday season.
Left untouched were the industry leading
, two stocks the analysts remained bullish about. He hedged those comments, however, explaining that uncertainty over an expected 2003 recovery may lead the two large-cap issues to miss Wachovia's price targets for next year.