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Sat, Apr 18, 2009 - Page 10 News List

Sony Ericsson to slash 2,000 jobs after quarterly loss

NOKIA The world’s leading handset maker said its net profit dropped by 90 percent, while its chief financial officer said the company would cut operating costs

AFP AND AP , STOCKHOLM AND HELSINKI

A person walks past mobile phones made by Finnish cellphone giant Nokia in Bochum, western Germany. The world’s leading handset maker on Thursday reported a 90 percent drop in its first-quarter net profit but its shares shot higher as investors seized on signs of improving market conditions.

PHOTO: AFP

Mobile phone maker Sony Ericsson yesterday said it would cut 2,000 more jobs after it swung to a loss of 293 million euros (US$384 million) in the first quarter of the year.

The group, which experienced losses in the third and fourth quarters of last year, had warned last month that its first-quarter figures would be weak because of recession in major economies that has hit demand for its handsets.

It vowed to deepen job cuts announced last year in a bid to reduce costs and return to profitability.

“The additional cost saving program announced today will include a further reduction in the global workforce of approximately 2,000 people,” the company said in a statement.

Sony Ericsson has been trying to focus its business on fast-growing emerging markets in order to reduce dependence on its traditional, near-saturation European zone.

As a result it has sold more low-end phones where prices are lower and the competition is tougher, analysts say, but it has lacked the products to make a splash in emerging markets such as China and India.

In the fourth quarter, it made a loss of 187 million euros.

The global economic slowdown has reduced demand for consumer electronics and established handset makers such as Sony Ericsson and market leader Nokia must also contend with the runaway success of Apple’s iPhone, which dominates the high-end segment of the market.

On Thursday, Nokia said net profit dropped by 90 percent to 122 million euros and sales fell by 27 percent to 9.3 billion euros in the first quarter.

“The global economy as a whole remains weak and we are planning our business accordingly,” Nokia chief executive Olli-Pekka Kallasvuo said in a conference call. “I believe the current environment favors Nokia. Our position of strength allows us to maintain our strategic objectives.”

Chief financial officer Rick Simonson added that the company would continue to cut operating costs.

“We have a realistic view of the macroeconomic downturn and we do not expect a quick or strong recovery,” Simonson said.

Nokia sold 93 million mobile phones in the first three months of this year, down by 19 percent from 115 million in the same quarter a year ago.

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