Sony Ericsson posts heavy Q1 loss, slashes jobs

Discussion in 'Political Zone' started by Kangaroo, Apr 17, 2009.

  1. Kangaroo

    Kangaroo Active Member

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    Sony Ericsson posts heavy Q1 loss, slashes jobs
    Fri Apr 17, 2009 6:53am EDT
    By Mia Shanley

    STOCKHOLM (Reuters) - Mobile phone maker Sony Ericsson said on Friday it plans to cut one in five jobs this year in its battle to return to profit as a sluggish market brought a hefty first-quarter loss, as expected.

    The world no.4 handset manufacturer, owned by Sweden's Ericsson (ERICb.ST: Quote, Profile, Research, Stock Buzz) and Japan's Sony Corp (6758.T: Quote, Profile, Research, Stock Buzz), plans to slash 2,000 jobs this year after shedding a similar number in 2008.

    The company shed a quarter of its market share to 6 percent year-on-year but said it saw signs of a stabilization in demand, echoing comments made by top cellphone maker Nokia (NOK1V.HE: Quote, Profile, Research, Stock Buzz) a day earlier.

    "In March there were signs of stabilization ... in the U.S. and in Europe," CEO Hideki Komiyama told Reuters in an interview.

    "Still, in some areas we still have weakness, in Eastern Europe, in Russia, the Middle East and India, but some other areas have clearly started seeing some signs of correction."

    The company's pretax loss of 370 million euros ($485 million) - against analysts' forecasts of 371 million - came a day after Nokia reported its first-ever quarterly loss.

    "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.

    "Imaging and music are now part of most of the competitors' portfolios and Sony Ericsson is finding it more and more difficult to have its products stand out," said Gartner Research Director Carolina Milanesi.

    Because of the economic downturn consumers are increasingly selective about their mobile phone purchases and upgrades.

    "Touchscreens, good web browsing, and navigation are moving up the wish list," Milanesi said.

    Sony Ericsson lacks strength in these areas.


    The cellphone industry has entered the toughest year in its history as consumers rein in spending, with the market set to fall 10 percent or more this year, and retailers try to clear inventories of unsold phones after bleak holiday sales.

    Komiyama said the company targeted to cut a further 400 million euros in annual operating expenses by mid-2010, taking on additional 200 million in restructuring charges.

    An analyst who asked not to be identified said Sony Ericsson's additional cost cuts were inevitable.

    "With the level of losses we are seeing and the gross margins they have, they don't have any choice. But the uncertainty remains. Will this be enough?" he said.

    Sony Ericsson, the fourth biggest global handset maker after Nokia, Samsung (005930.KS: Quote, Profile, Research, Stock Buzz) and LG (066570.KS: Quote, Profile, Research, Stock Buzz), had flagged its steep first-quarter loss in a profit warning last month, and warned of a collapse in unit sales.

    It sold 14.5 million phones in the first quarter, down from 24.2 million in the fourth, and saw its market share slip by 2 percentage points to 6 percent compared with the same quarter last year.

    Shares in Ericsson were up 2.5 percent at 77.90 Swedish crowns at 6:10 a.m. EDT. Sony shares had closed up 5.9 percent in Tokyo before the results.
  2. ShiningStar

    ShiningStar Well-Known Member

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    Just wait a couple of months, Team Obama has this recession/depression licked. HIs stimulus which takes affect in 2010 has things cleaned up in 09. We are all systems go.
  3. BrAinPaiNt

    BrAinPaiNt Winter is Coming Staff Member

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    Does that count when we also see some companies reporting quarterly gains like WFC, Citigroup, GE and others?
  4. ShiningStar

    ShiningStar Well-Known Member

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    Oh you mean the guys that got bailout money so making a profit and staying afloat are easier. Yeah, because this depression/recession was sooooo bad, they really didnt need the bailout money cause team Obama had this thing licked. Depending on if someones brain works or not. Its either the worst depression/recession EVA, and we need a big *** stimulus package, or its done at the end of the year and we got this puppy licked. But its certainly both since the worst depression/recession really wont last that long.
  5. BrAinPaiNt

    BrAinPaiNt Winter is Coming Staff Member

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    If you say so.
  6. bbgun

    bbgun Benched

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    If there's bad economic news to be found, Kanga will sniff it out.
  7. Hoofbite

    Hoofbite Well-Known Member

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    Their phones just aren't that appetizing. No shock that they are losing money when RIM, Apple, HTC, Palm and even Google are offering pocket-sized portable computers with phone functionality.
  8. ShiningStar

    ShiningStar Well-Known Member

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    I didnt, Team Obama did. Im just saying believe in the man.
  9. BrAinPaiNt

    BrAinPaiNt Winter is Coming Staff Member

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    If you say so.:laugh2:
  10. SweCowboy

    SweCowboy Member

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    I agree with you to a certain point. We have never been able to really capture the trends in the American markets well enough and certainly not fast enough to be a big player in that market. I really hope that is going to change later this year however since we do have some interesting phones coming out such as the Idou.

    What the article doesn't say that was also in the press release was that we are going to cut approximately 2000 jobs globally. I work for Sony Ericsson in Lund but I don't think I will be affected but I think a substantial amount of the cuts will be here as 4 500 out of around 11 000 work in Lund.

    The good thing about being employed in Sweden is that the deals you get when you lose your job is usually pretty good. The bad part is that the process takes a very long time, the specific cuts in Sweden will probably not be announced until late this year. This means that the next 6 months, at least, will be full of speculation and rumors at work which sucks. The last time we went through this last year it was pretty bad for the entire time. The guys in the US that lost their jobs where given notice after around a month and could then move on. Here it took more then 6 months. On the other hand the guys in the US got something like 2 months of pay, the guys in Sweden got 6 months pay without work.

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