BUY OR SELL-Dial M for more trouble at mobile phone makers

By Kevin Plumberg and Park Jung-youn

HONG KONG/SEOUL, July 25 (Reuters) - Mobile phone makers have taken a big hit as a slowing global economy drains demand, and must now hope consumers in emerging markets upgrade to new, more expensive models and don't choose the iPhone.

That hope, even as a consumer slowdown has the potential to spread to markets like China and India, is being tested as a global selloff in equity markets batters consumer goods makers.

Samsung Electronics' (005930.KS) optimistic view for its mobile business was about the only bright spot in its outlook for the third quarter. The rest of its results were disappointing, knocking its shares down more than 6 percent on Friday.

Some analysts reckon Samsung's rosy mobile outlook could fall victim to the massive economic forces at play.

"While the global handset market is set to grow through the year, and South Korean handset makers will probably take more market share from struggling peers like Motorola and Sony Ericsson, grim macroeconomic conditions will inevitably affect the sales and product mix," said Uno Kim, analyst at Prudential Investment & Securities in Seoul.

Internally, there are also worries about competition from Apple's sleek, tech-chic iPhone, though analysts say products like the iPhone could boost demand for higher margin, high-end handsets.

Meanwhile, handset makers' share prices continue to struggle, with Samsung, for example, dropping 26 percent since mid-May.

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