Sony Ericsson: Losses narrow but sales shrink - Mobile World Live

Sony Ericsson: Losses narrow but sales shrink

21 OCT 2009

Struggling handset vendor Sony Ericsson has reported a second-quarter net loss of EUR213 million, an improvement over the previous quarter and ahead of analyst expectations, though sales continued to fall. It was the handset vendor’s fourth consecutive quarterly loss. The second-quarter loss compares to a EUR293 million net loss in 1Q09 and a EUR6 million profit a year earlier. According to the Wall Street Journal, analysts had been predicting a loss of EUR298 million. Second-quarter sales fell to EUR1.68 billion, a year-on-year decrease of 40 percent, and below analyst forecasts of around EUR1.78 billion. The firm said the weak sales performance was due to difficult market conditions in all regions, particularly Latin America. Units shipped in the quarter were 13.8 million, a decrease of 43 percent year-on-year and a sequential decrease of 5 percent. However, the firm’s gross margin improved sequentially, despite lower volumes and sales, driven by a more favourable product mix and less material write-off costs than the previous quarter.

“As expected, the second quarter was challenging and we still believe the remainder of the year will be difficult for Sony Ericsson,” said Dick Komiyama, Sony Ericsson’s president. “Our focus remains on bringing the company back to profitability and growth as quickly as possible, and our performance is starting to improve due to our cost reduction activities.” The company said that its plan to reduce operating expenses by EUR880 million was on track, with the full benefit expected during the second half of 2010, noting that restructuring charges are estimated to be “well within” the previously announced EUR500 million. It reiterated its forecast that the global handset market for 2009 will continue to contract by at least 10 percent from around 1,190 million units in 2008. Sony Ericsson estimates that its market share was “over 5 percent” in the second quarter compared to 6 percent in 1Q09.

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