MarketWatch: Sony Ericsson swings to loss

Sony Ericsson suffered a 23 per cent slump in sales of mobile phones as the struggling company reported net losses of €187 million (£165 million) in the fourth quarter.

In total, the joint venture between Sony and Ericsson lost €73 million in 2008 compared with a profit of €1.1 billion the previous year.

The company blamed the global economic crisis and said that it expected market conditions to deteriorate further this year.

Sales of mobile phones in the three-month period were down 23 per cent from €3.8 billion in the same period in 2007, Sony Ericsson said.

“The mobile telephone market has been very badly affected [by the global economic crisis] and, as expected, the fourth quarter was very difficult,” Dick Komiyama, the company president said.

“We expect a further deterioration of the market in 2009, especially in the first quarter."

Pre-tax losses totalled €261 million, larger than the €72 million loss forecast by a Reuters poll of analysts.

A year earlier the venture made a profit of €501 million.

Units shipped fell 6 per cent from 27 million handsets sold in 2007 compared with 24.2 million units sold last year, a clear sign of the deterioration of the business, analysts said.

“Clearly, Ericsson shouldn’t be pleased with the development in the bottom line, but these are difficult times,” Robert Jakobsen, a Jyske Bank analyst, said.

Despite the poor results, Ericsson shares were up 2.3 per cent at SwFr59.5.

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