Mobile phone maker Sony Ericsson said this morning it would slash another 2,000 jobs this year to fight a slumping handset market as it posted a big first-quarter loss in line with expectations.
Sony Ericsson, owned by Sweden's Ericsson and Japan's Sony Corp, made a pretax loss of €370 million ($485 million) after restructuring charges of 12 million. Analysts had on average forecast a loss of €371 million.
Sony Ericsson President Dick Komiyama announced a target to cut a further €400 million in annual operating expenses by mid-2010, which would require an additional €200 million in restructuring charges.
The results came a day after the world's biggest mobile phone maker, Nokia, reported its first-ever quarterly pretax loss, but reassured investors that it saw signs that demand was stabilising.
Sony Ericsson sales slid to €1.74 billion in the quarter from €2.7 billion a year ago.
“What should Sony Ericsson do to get out of this slump? They are not big enough to compete with Nokia, and now we have the iPhones. I don't think they should go after all segments of the market,” said Michael Andersson, analyst at Evli.
Sony Ericsson's success has been built on a strong offering of mid-range phones with high-quality cameras and music players, but this market segment has seen a sharp fall in demand as operators have doled out subsidies to more expensive phones.
“They should stay where they are, and try to take their part of the high-end smartphone market,” Mr Andersson added.
Sony Ericsson repeated that it expected the global handset market to contract at least 10 per cent this year, roughly in line with Nokia's outlook, and said the market had remained “extremely challenging” in the first quarter.
The cellphone industry has entered the toughest year in its history as consumers rein in spending and retailers try to clear inventories of unsold phones after bleak holiday sales.
An analyst who asked not to be identified said Sony Ericsson's additional cost cuts were inevitable.
Reuters