Ahead of the Bell: Handset stocks

In a Monday client note, Piper Jaffray analyst T. Michael Walkley cut his handset estimate for 2008 to 1.23 billion units from 1.25 billion and said he now expects unit sales to decline 5.4 percent to 1.17 billion units in 2009. Previously, he expected flat unit sales in 2009.

Walkley's adjustment comes a few days after Nokia Corp., the world's largest cell phone maker, lowered its outlook for fourth-quarter mobile device volumes across the industry and predicted a 2009 decline compared with 2008 volumes due to the economy.

Walkley also cut his fiscal 2010 unit estimate for BlackBerry smart phone maker Research In Motion Ltd. Monday, citing his predictions for weaker smart phone sales overall and North America share losses for RIM as the market becomes more competitive.

In the nearer term, he thinks RIM needs strong sales of two new models--the Bold and Storm--to meet fiscal third-quarter guidance. The Storm is RIM's first touch-screen device and is set to launch on Friday.

So far, checks indicate Bold sales have been "solid," he said, but since the Storm isn't launching until Nov. 21 this "should limit initial units for the November quarter," he said.

In another note, Walkley cut his estimate for Motorola Inc.'s 2009 sales by 4 percent and lowered his earnings-per-share estimate for that year to 12 cents from 18 cents. The changes resulted from his overall global handset estimate changes.

"While we believe (handset unit head) Sanjay Jha is taking steps that have the greatest likelihood to turn around Motorola's struggling mobile device business, we believe the challenging macro creates greater risks and a longer time horizon for achieving such success," the analyst said.

Walkley kept his "Neutral" rating and $5 price target for the handset maker's shares.

Meanwhile, Piper Jaffray analyst Gene Munster said that in-store checks lead him to think Apple will sell 6.4 million iPhones in the fiscal first quarter. In the fiscal first quarter of 2007, Apple sold 2.3 million iPhones.