This page is quite old hence its rather spartan appearance.
Why not check out our Latest Stories page for our newest articles or search our site for anything.
MARKET COMMENT
By
Carburton Street, London -- Carphone Warehouse's (LSE: CPW) business model is based on its ability to serve mobile handset connoisseurs. And by definition this will be a niche market. As such Carphone's success will be driven by its knack to appeal to this small but no doubt appreciative segment of the market. However for the majority of mobile phone users, the common or garden variety of telephone handset that is available from any good electrical retailer will do just as well. Carphone Warehouse told the market today that full year profit would fall below market expectations. The company blamed its woes on tough trading in Europe where the handset market is estimated to be down by over 40%. The company pointed to particular weakness in Germany, the Netherlands and Belgium. Weakness was also the theme in the UK where connections were down by 3.7% on the previous year and like-for-like revenues were 5% lower. Christmas provided the company with little respite. An aggressive marketing policy, which focussed on an innovative prepay offering, boosted sales but adversely affected its prepay/subscription mix profile. Looking forward the company expects the mobile handset market to remain tough for the next half year and anticipates benefiting as the number of competitors reduces. It would appear that Carphone Warehouse is now caught between two opposing marketing strategies. The original business model based on differentiation that focuses on a narrow market target has been diluted to embrace some elements of the mass market. The prepay phone is a mass-market model and does not normally sit comfortably with a company whose culture is centered on differentiation. It is easy to see why Carphone Warehouse has gone down this route but investors must now ask if they are comfortable knowing that they are investing in a mass-market phone distributor rather than a niche player. Schizophrenia is not a viable strategic option. More on the Carphone Warehouse discussion board.