3/20/2009 2:18:00 PM
Sony Ericsson set to post third consecutive quarter of losses
Sony Ericsson’s problems appear to be worsening with the announcement that it will post a £370m loss for the first quarter of 2009.
CEO Dick Komiyama’s prediction in the final quarter of 2008 that the handset market would contract by 5% in 2009 has now doubled to 10% (the same level of decline forecasted by Nokia).
The falls have been attributed to a drop in consumer demand as well as the manufacturer having to clear stocks after its forecasts didn’t materialise into sales.
The manufacturer expects to ship 14 million handsets in the first quarter at an average selling price of £113. In the last quarter of 2008, the company shipped 24.2 million handsets with a similar average sales value.
It is the third consecutive financial quarter of losses posted by Sony Ericsson, with little encouragement that things will quickly change.
Cost will come out of the business, as Sony Ericsson cuts at least 2,000 jobs globally.
The manufacturer’s difficulties are taking place on a global level, with low demand for its handsets at the top-end. The losses appear to have been worsened by Sony Ericsson's strategy to have a large range of products, over the last couple of years.
Investment in developing that range has been expensive, and has been criticised for being bloated and derivative.
The UK has been a relatively strong performer for Sony Ericsson, with the manufacturer maintaining a reasonably strong market share over the last few months, hovering around the 28% level, and even taking the top position at certain points.
By contrast, the company has had around an 8% share globally.
However, even the UK has suffered recently, with high levels of handset returns on some of its main devices – the W910i, the K850i and, most recently, the C905.