With a deep, wide, and long recession no one should expect any of the handset vendors to grow market share at all in 2009. Consumer spending is dropping everyday.

What investors need to keep an eye open for are handset vendors who have a smartphone development program underway and has smartphone product on the street now. The year 2009 will hurt many telecom companies and that is unavoidable. However, the year 2009 can be used to test and position new smartphone products and devices. Investors need to query their handset manufacturers for 2009 and 2010 tactical and strategic plans.

Wall Street will be looking for any news at all to get investors to throw their money into the marketplace. This is good, because the vendors will be given the necessary breathing room to try out new product lines without so-called analysts breathing down their necks.

Will there be excess inventory in 1Q2009, probably and so what? The handsets can be sold cheap to get product in place. The vendors will not make any money but these vendors need to stop crying over spilled milk and focus on surviving 2009 and 2010. The situation in 2001 is completely different than the one we are in today. In 2001, the industry was in a state of denial about the industry being in a state of collapse. The knucklehead lending and investment practices that destroyed the economy now is what wiped out the telecom/Internet sector 8 years ago. In 2001 and even 2002, telecom, Internet, and technology companies were actively being encouraged to continue spending capital on equipment that would never be used. I distinctly recall those horrible days. Now Wall Street cannot deny what has happened in 2008.
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Fortunately for investors, the technology companies have become somewhat jaded by so-called predictions of good news and now take the appropriate path of caution. Telecom, technology, and the few remaining Internet companies are better prepared to deal with 2009 and 2010 than they were with the crash of 2001. In fact, the word restructuring is now a commonplace term and companies are focused are continually optimizing their performance. One of the cornerstone principles for restructuring companies is “optimization”.

The mobile phone vendors need to focus on optimizing their most successful lines. The vendors will need to spend 2009 innovating and not crying in their soup. With carriers being careful with their dollars, the vendors will need to work closely with the carriers. Keep in mind the carriers are in the same economic boat. Vendors who make the effort to work closely with the carriers in 2009 will fare better in 2010 than those who do not. The carriers can be a source of customer information and insight about new features and services.

P.J. Louis LLC is an independent advisory and turnaround firm providing operational restructuring leadership to companies and their stakeholders. We serve clients in the telecommunications, technology, Internet, media, and network security industries with creative solutions and ideas that enhance corporate value during adverse periods. P.J. Louis LLC possesses in-depth expertise in operational and technology management. Our expertise enables us to manage due diligence efforts that only professionals with deep insight in the industry can perform. The firm views intellectual property as a key component of any technology company’s value. Companies need to find new ways of generating value out of their intellectual property portfolios – our firm is dedicated to making that happen. We support private equity investors and creditors. We support USPTO patent re-examinations. We support intellectual property attorneys in patent infringement and copyright infringement litigations. For more information, see: www.pjlouis.com