Sony Ericsson posts huge losses in first quarter

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Sony Ericsson today confirmed its recent bleak predictions, with large losses in its first quarter results and job losses on the cards to help cut costs.

Income before taxes for the company came in at a loss of €358 million (£316 million), within its predictions released last month.

It shipped just 14.5 million phones in the quarter, a 35 per cent drop compared with the same period last year. Sales for the quarter decreased by 36 per cent to €1,736 million.

Dick Komiyama, president of Sony Ericsson, said in a statement: “As expected, the first quarter of this year has been extremely challenging for Sony Ericsson due to continued weak global demand. We are aligning our business to the new market reality with the aim of bringing the company back to profitability as quickly as possible.”

Sony Ericsson has been in troubled waters for some time now. However, the company is clearly keen to put measures in place to help claw back its profits.

A saving programme, for example, will be launched with the aim of reducing annual operating costs of €180 million by mid 2010 - this will include the loss of 2,000 jobs. This follows on from the previous cost-cutting measures that reduced overheads by €300 million but also included 2,000 job cuts.

Carolina Milanesi, research director at analyst Gartner, said that Sony Ericsson is being too quick to make excuses.

“Although Sony Ericsson continued to blame lower demand and inventory de-stocking for the weak performance, Gartner believes that the company's current portfolio is contributing to these factors,” she said in a statement.

“Consumers want more.... Touchscreens, good web browsing, and navigation are moving up the wish-list. Because of the current economy consumers are becoming more demanding when they do decide to upgrade their phone and are less willing to settle for something that does not fully meet their needs.”

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