17 Oct 2008
Sony Ericsson has reported a 10% drop in sales to €2,808 million (US$3,777 million) compared to the third quarter of 2007, citing a shift in production to cheaper phones as well as exchange rate fluctuations. The company posted a net loss of €25 million (US$33.6 million) - lower than the average of €74 million loss which had been expected by analysts.
Gross margin also decreased year-on-year and sequentially due to continued price pressure at a time of adverse cost trends in the supplier base.
The company estimated that its mobile phone market share for the third quarter remained flat and is estimated to be around 8%.
"As expected the third quarter has continued to be challenging for Sony Ericsson. We have moved forward with our plans to align operations and resources with the consolidation of R&D facilities into a more agile and cost efficient organisational structure. As previously announced, our target remains to reduce operating expenses by Euro 300 million annually by the end of the second quarter 2009, with the full effects expected to appear in the second half of 2009.These plans are progressing in line with expectations," said Dick Komiyama, President, Sony Ericsson.
As communicated previously, Sony Ericsson paid a second dividend to the parent companies totalling €300 million (€150 million each) in the quarter based on 2007 earnings, and at the end of September 2008 Sony Ericsson had net cash of €1.4 billion (US$1.9 billion).
Sony Ericsson forecasts that the global handset market for 2008 will grow at a rate of around 10% from more than 1.1 billion units in 2007, while the industry ASP will continue to decline. The majority of this growth is expected to be in emerging markets where lower priced phones dominate.
Posted to the site on 17th October 2008
