Sony Ericsson warned that slower growth in its European markets would hit its first quarter sales, though its gross margin would remain the same on the year ago level.
Net income before tax at the joint venture, owned by Ericsson and Sony, is set to be €150 million ($237.2 million) to €200 million, while net sales would fall from a year ago level, it said today.
"Slowing market growth of mid-to-high end phones in markets where Sony Ericsson has a strong presence is affecting sales," the firm said, adding the effect was visible mostly in Europe.
"In addition, certain component shortages for popular mid-priced phones have contributed to modest unit sales growth in the first quarter."
Last week chip maker Texas Instruments cut its first quarter forecasts, citing weaker demand for chips used in higher priced 3G phones, and hitting mobile industry stocks in Europe as investors fear a weakening global economy is biting into consumers' appetite for pricier phones.
Sony Ericsson President Dick Komiyama said that the market was "proving to be challenging".
"This has been more pronounced in the mid-to-high end replacement sector of the market in Europe, where Sony Ericsson has stronger than average market share," he said in a statement.
Sony Ericsson said it now plans to ship approximately 22 million phones during the first quarter of 2008 with an average selling price at around €120.