Alexi Mostrous
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Sony Ericsson said today it would slash a further 2,000 jobs this year after it posted a pre-tax loss of €358 million (£315 million) in the first three months of 2009.
The troubled mobile phone maker had warned in March that its first quarter figures would be weak after recession in the world's major economies hit demand for its handsets.
Its results come a day after Nokia, the world's largest mobile phone maker, reported a 90 per cent fall in profits for the first quarter.
Sony Ericsson’s latest job cuts are on top of 2,000 previously announced as part of another savings drive, now completed. It was not clear this morning where the cuts would be made, although the business employs around 250 staff in the UK. One site in Manchester, which used to employ 500 people, is currently in the process of closing.
Overall, Sony Ericsson plans to cut a third of its global workforce by summer next year, from 12,000 employees to 8,000, a spokeswoman said.
Sales at the world’s fourth biggest mobile phone maker fell to €1.7 billion, from €2.7 billion last year, primarily due to continued weak consumer confidence and de-stocking.
The business said that over the past 12 months the average selling price of its units had fallen by €1 to €120.
Sony Ericsson said it planned to further reduce operating expenses by mid-2010 in an effort to save €400 million. It expects the global handset market to contract by at least 10 per cent in 2009, from 1,190 million units in 2008.
Dick Komiyama, president of Sony Ericsson, said: "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.”
Some analysts have criticized Sony Ericsson for focusing too much on the more expensive mid-range and high-end phones, thereby missing opportunities in emerging markets.
The average selling price of Sony Ericsson phones was almost double those sold by Nokia, the market leader.
The results were in line with analysts’ expectations of a €371 million loss — but did not include €19 million in restructuring charges.
They marked the third consecutive quarterly loss for Sony Ericsson, which reported a profit of £89 million in the same period in 2008.
Sony Ericsson, owned by Ericsson and Sony Corporation, said in a statement that it would take an additional €200 million in restructuring charges due to the new programme.
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