Plummeting demand for its high-end smartphones and inflation eroding margins for inexpensive mobile phones leads to job cuts
The world’s fifth-placed handset maker is to shed 2,000 jobs as the company reports a Q2 operating loss of US$3.17 million.
Sony Ericsson a drop in net income from US$347.6 million a year ago to US$9.48 million, while sales slumped 9.4 per cent to US$4.4 billion.
Unit sales in the quarter reached 24.4 million, down from 24.9 million units a year ago.
The closely watched average selling price per unit was US$183. A year ago, Sony Ericsson’s average price per unit was US$197.50.
The joint venture between Sony and Ericsson AB also forecast further bad news in the third quarter.
“Challenging market conditions are expected to prevail this quarter,” the company said in a statement.
Sony Ericsson said the 2,000 job cuts among the company’s 11,900 employees will save US$474 million annually.
The July 18 results marked the second consecutive quarter that Sony Ericsson has issued a profit warning before issuing quarterly results.
A little more than a year ago, Sony Ericsson was the number four handset maker, pushing Motorola for the number 3 spot.
Since then, however, the company has fallen to fifth while LG Electronics has taken over the fourth spot.
Dick Komiyama, CEO of Sony Ericsson, said: “We are aligning our operations and resources worldwide to meet an increasingly competitive business environment and to help restore our capability for profitable growth.”
Sony Ericsson is the second of the world’s handset makers to announce its quarterly results since research firm Gartner slashed its forecast for the mobile phone market to between 10 per cent and 11 per cent growth from a May estimate of 10 per cent and 15 per cent.
In 2007, mobile phone growth margins were 16 per cent.
Finnish mobile phone maker Nokia issued second quarter results earlier this week that were in line with analyst predictions.
LG Electronics will announce its second quarter results on July 21, followed by Samsung on July 25 and Motorola on July 31.