Handset sales ring in market scrutiny

As IT investors brace for a wave of financial reports next week, mobile device makers are attracting attention as Asia becomes an increasingly important battleground for handset sales.

For example, Motorola preannounced part of its quarterly report, due July 19, on Wednesday, saying that second quarter sales would be $8.6 billion to $8.7 billion, instead of $9.4 billion as previously forecast. The company expects a drop in handset sales in Asia, where vendors are vying to get the lion’s share of the market in growing national economies, as North American and Europe become saturated with mobile phones.

Despite the revised forecast, Motorola enjoyed a spike in the price of its shares caused by rumors that CEO Ed Zander might resign. Motorola shares jumped Wednesday by $0.33 Wednesday to close at $17.95, and rose again Thursday to close at $18.08.

Zander attracted criticism from heavyweight investor Carl Icahn earlier this year and now has come under attack from well-known activist shareholder Eric Jackson. Zander’s departure would indicate that a serious restructuring was under way at the company, which has been outflanked on several fronts in the handsets wars by rivals like Apple.

Meanwhile, investors saw Motorola’s quarterly weakness as Nokia’s gain. Brokerage Oppenheimer & Co. reiterated a “buy” rating on Nokia after Motorola’s announcement. Nokia shares rose $1.08 Thursday to close at $29.95.

The mobile phone market has come under increasing scrutiny lately in the wake of the June 29 launch of Apple’s iPhone in the U.S. Apple is now reported to be in talks with carriers to launch the device in Europe, Finland-based Nokia’s home market.

A report from a JP Morgan Chase analyst Tuesday that Apple will also launch a cheaper version of the iPhone in the fourth quarter drove up Apple shares. JP Morgan analyst Kevin Chang said the new model could sell for less than $300, basing his report on Apple patent filings and component supplier sources. A cheaper iPhone would put it within reach of younger customers. Apple shares rose by $1.68 Thursday to close at $134.07.

Technology companies for the most part are riding high on general confidence in corporate earnings. The technology-heavy Nasdaq has hit several six-and-a-half year highs over the last 10 days. General economic conditions have helped. For example, the Dow Jones Industrial Average reached a record Thursday on positive news from retail sales data and continued mergers and acquisitions announcements.

But IT vendors themselves are coming off a string of quarters that have generally been good for earnings overall. The torrid pace of M&A in IT also continues unabated: Just this week, for example, Google beefed up security offerings with its planned $625 million buy of Postini.

Next week will provide key information for forecasts for the rest of the year as a string of IT bellwether reports quarterly sales and guidance for the rest of the year. Among those due to report: IBM, Google, Yahoo, Motorola, Microsoft, Intel, AMD, and SAP.