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Fri, Jul 17, 2009 - Page 10 News List

Sony Ericsson books fourth consecutive quarterly loss

TROUBLES The LM Ericsson-Sony Corp joint venture’s weak position has led to speculation it may need a cash injection, possibly changing the ownership structure


Handset maker Sony Ericsson said yesterday it booked another loss in the second quarter as the global economic crisis continued to weigh on mobile phone sales.

The LM Ericsson and Sony Corp joint venture said the loss of 213 million euros (US$299 million) compared with a profit of 6 million euros a year ago. The result was the fourth consecutive quarterly loss for Sony Ericsson.

The company shipped 13.8 million units in the quarter, down 43 percent year-on-year. Sales for the period fell by 39 percent to 1.7 billion euros from 2.8 billion euros in the second quarter of last year.

EQ Bank analyst Jari Honko said the report was largely in line with his expectations and underlines that Sony Ericsson is in “deep trouble.”

“My future outlook for the company is pretty dark,” he said. “I haven’t seen any magical trick that could improve Sony Ericsson’s position.”

Although the weak handset market is causing difficulties for Sony Ericsson, it also has some “major company-specific issues” regarding its product strategy, Honko said.

“One should not draw any hasty conclusions for other companies, such as Nokia from this report,” he said.

Sony Ericsson estimates its market share was more than 5 percent in the second quarter compared with about 6 percent in the first quarter. It also reiterated its outlook for the global handset market to fall at a rate of about 10 percent this year.

“As expected, the second quarter was challenging and we still believe the remainder of the year will be difficult for Sony Ericsson,” Sony Ericsson president Dick Komiyama said in a statement. “Our focus remains on bringing the company back to profitability and growth as quickly as possible and our performance is starting to improve due to our cost reduction activities.”

The company’s weak position has triggered speculation in the media that it may need a cash injection, possibly altering the ownership structure. Honko said such views were warranted.

“We’ll definitely see Sony and Ericsson discussing potential ownership changes or new investments in Sony Ericsson,” he said.

In April, Sony Ericsson said it would slash 2,000 jobs, on top of 2,000 jobs cut last year, to lower costs.

Yesterday it said programs launched last year to cut costs by 880 million euros were on track, with the full benefit expected during the second half of next year. Since the beginning of the cost-cutting programs, Sony Ericsson has shed about 2,350 jobs, it said.

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