Cell phone sales on the rise

Analysts raised their forecasts for worldwide cell phone sales in 2003, in another hopeful sign for the struggling industry.

Research firm Strategy Analytics now expects 492 million cell phones to be sold worldwide this year, buoyed by strong third-quarter sales of camera phones and color screen handsets. That's an increase of 15 percent compared with the previous year. The analyst firm in August predicted worldwide sales of cell phones would top out at 455 million in 2003.

Strategy Analytics forecast the increase weeks before the start of the traditional holiday shopping season, which is expected to help handset sales keep up the pace. The industry has seen a string of quarters in which sales grew by more than 10 percent over earlier quarters.

"We see positive signs from vendors and carriers that this growth has the stamina to continue through the holiday season," Neil Mawston, a Strategy Analytics analyst, wrote in a report on Monday. "Three successive quarters of double-digit, year-over-year growth is an encouraging sign that the global handset market is recovering strongly."

The analyst's rosy outlook for 2003 is more upbeat news for the mobile phone industry, which has been battered for three years by slowing sales of handsets, network equipment and telephone services. But positive signs began emerging in August, when Cisco Systems Chief Executive John Chambers said he believed that technology spending was on its way back up.

Since then, major cell phone network equipment makers have reported some of their largest contracts in years. The recently concluded third quarter was among "the best quarterly performance in several years" for cell phone service providers, Mawston said.

But not everyone in the industry is so upbeat, including Lucent Technologies Chief Executive Officer Patricia Russo. After the cell phone network equipment maker posted its first profitable quarter in three years, she warned investors that the company still has "some work to do and, in the current challenging market environment, it's likely we will still have some ups and downs on the way to sustained profitability."