UPDATE 2-Carphone ups profit view, to pay div; shares soar

* Sees full-year EPS at 13.5-14.0p vs 11.5-11.9p before

* Sees higher profit contribution from Best Buy Mobile U.S.

* Sees higher loss of 50-55 mln stg from UK megastores

* To pay final dividend of about 4.5p a share

* Shares jump over 10 pct to post-demerger high

(Adds CEO, analyst comment, shares, detail, background)

By Mark Potter

LONDON, Nov 5 (BestGrowthStock) – Mobile phone retailer Carphone
Warehouse (CPW.L: ) raised its earnings forecast and pledged to
pay its first dividend, saying strong U.S. growth and demand for
smartphones would offset extra investment in its UK megastores.

Shares in the group, which owns 50 percent of a venture with
U.S. electricals retailer Best Buy (BBY.N: ) as well as a 47.5
percent stake in Virgin Mobile France, soared over 10 percent to
340 pence on Friday, the highest level since a demerger from
telecoms group TalkTalk (TALK.L: ) in March.

Chief Executive Roger Taylor told Reuters that Carphone and
Best Buy planned to accelerate the rollout of their standalone
U.S. mobile phone stores to 175 by March 2011, up from their
previous goal of 150.

“The U.S. were probably a bit behind Europe (in take up of
smartphones),” he said in a telephone interview.

“Now they’re really catching up.

Carphone said it was more cautious about its business in
Europe, where smartphones like Apple Inc (Read more about Apple stock future.)’s (AAPL.O: ) iPhone are
better established and consumers face austerity measures as
governments seek to cut debts.

However, Taylor said Christmas could prove to be better than
expected if shoppers are prepared to trade up to pre-pay
smartphones, which typically cost 60 to 150 pounds ($97 to
$242), compared with older products at 20 to 40 pounds.

“Are customers going to be willing to make that leap in the
current economic climate? That is the unknown,” he said.

Carphone also said it expected the new chain of Best Buy
megastores in Britain to make a loss before interest and tax of
50 million to 55 million pounds this year, compared with
previous guidance for a loss of 40 million to 45 million, due to
higher marketing expenses.

Credit Suisse analysts applauded the strong U.S. results,
but added: “We expect there to be some debate about increasing
losses at Best Buy “Big Box” (megastores) and a slightly weak
top line performance in the core (European) retail division.”

At 0835 GMT Carphone shares, which have more than doubled in
value since March, were up 9.1 percent at 336 pence, valuing the
business at about 1.7 billion pounds.

RAISING EXPECTATIONS

Carphone said headline earnings per share for the year
ending March 2011 were likely to be around 13.5 to 14.0 pence,
up from its previous forecast of 11.5 to 11.9 pence.

Earnings surged to 5.5 pence a share in the six months ended
Sept. 30, up from 1.5 pence the year before and beating
analysts’ average forecast of 3.3 pence in a company poll.

The group said it now expected the Best Buy Europe venture’s
share of the Best Buy Mobile business in the United States to
reach 85 million to 95 million pounds this financial year, up
from its previous forecast of 53 million to 55 million pounds.

It plans to pay a final dividend of 4.5 pence a share.

Revenues from European stores open at least a year rose 2.4
percent at constant currencies in the first half, signalling a
recent slowdown after first-quarter growth of 3.7 percent.

Taylor said he was encouraged by the performance of the new
chain of British megastores, which aim to take on established
players Dixons Retail (DXNS.L: ) and Kesa (KESA.L: ).

A sixth store opened in Derby on Friday, while a
transactional website was launched on Thursday.
($1=.6198 Pound)
(Editing by James Davey and Hans Peters)

UPDATE 2-Carphone ups profit view, to pay div; shares soar