Sony Ericsson Posts Third Quarter Loss - InformationWeek

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10/17/2008
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Sony Ericsson Posts Third Quarter Loss

The world's fifth-largest cell phone manufacturer was hit by sluggish sales and posted a third-quarter loss of $33 million.

As the global economy continues to sputter, Sony Ericsson saw its sales struggle and it posted a third-quarter loss.

The world's fifth-largest cell phone manufacturer posted a net loss of about $33.7 million for the quarter. The company's sales were $3.7 billion, a decrease of 10% for the same period last year.

"As expected the third quarter has continued to be challenging for Sony Ericsson. We have moved forward with our plans to align operations and resources with the consolidation of R&D facilities into a more agile and cost-efficient organizational structure," Sony Ericsson president Dick Komiyama said in a statement. "We are committed to executing our alignment plan as speedily as possible to ensure we have the right size and organizational structure to return the business to healthy profitability."

Unlike rival Nokia, Sony Ericsson does not have a large line of basic, entry-level handsets that sell well in emerging markets like India and China. As such, the company is more susceptible to slipping demand for high-end handsets in mature markets. Additionally, the company saw its average selling price per handset fall to $146, down from $156 in the previous quarter.

The loss is not unexpected, as the company previously warned that there would be tough business months ahead. Sony Ericsson is in the midst of a restructuring effort that will cut about 2,000 jobs and is meant to reduce operating expenses by about $403 million annually.

The company said it has seen good sales with handsets like the C902 Cyber-shot, and it's awaiting the release of highly anticipated smartphones like the 8-megapixel C905 and the Xperia X1.

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