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Smartphones boost Carphone Warehouse profit forecast

Smartphone demand and US growth have lifted the profit forecast for Carphone Warehouse for the third time in six months.

Shares in Carphone Warehouse, Europe's biggest independent mobile phone retailer, rose over one per cent after it said it was continuing to benefit from a strong product cycle.

"We are well positioned to continue to capitalise on the rapid development and proliferation of smartphones and the ever-expanding range of tablets coming to the market despite the uncertainty around the economic environment," said chief executive Roger Taylor.

Carphone, which owns 50 per cent of a venture with US electricals retailer Best Buy and a 47.5 per cent stake in Virgin Mobile France, raised its forecast despite anticipated big losses at its new UK megastores.

Earnings per share in the year ended March 31 were increased to 14.5 to 15 pence from a previous guidance of 13.5 to 14 pence.

Shares in Carphone currently valuing the business at about £1.82 billion.

"Carphone Warehouse continues to benefit from higher value smartphones offset by a decline in prepay volumes even through a tough economic environment," said analysts at Credit Suisse.

Carphone's venture with Best Buy, Best Buy Europe, includes Carphone's mobile phone stores, the new chain of Best Buy-branded electricals megastores and a profit sharing agreement on Best Buy Mobile shops in the US.

The UK consumer electricals market is overcrowded, say analysts, who think the joint venture should withdraw from megastores.

Carphone and its American partners will outline their long term plans for the business in June, said Taylor.

"We'll talk about our entire strategy for it," he told Reuters.

"What level of investment we make, what level of return we expect to make, what we see the store formats as, how we see it evolving."

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