Sony Ericsson Mobile Communications AB (Sony Ericsson) announced today its financial results for the first quarter of the ongoing year. As expected, the company's performance was a poor one, and it posted a loss of 358 million Euros (excluding restructuring charges) as income before taxes for the time frame, while also announcing 2,000 more layoffs globally.
The mobile phone maker managed to ship 14.5 million handsets during the first quarter of the year, 35 percent less units compared to the same period last year, yet in line with previous announcements made on March 20, that the estimated sales volume would be of 14 million. During the time frame, the company registered sales of 1,736 million Euros, a 36 percent decrease on a yearly basis.
According to the Japanese-Swedish joint venture, the main cause for the lowered sales volume consists of a “continued weak consumer confidence and de-stocking in the retail and distribution channels.” The company also announced that its Gross margin dropped both year on year and quarterly, reaching 8 percent.
“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,” said Dick Komiyama, president, Sony Ericsson. “The management intends to pursue an additional cost saving program targeting a further annual operating expense reduction of Euro 400 million, to be completed by mid-2010.”
Sony Ericsson already slashed 2,000 jobs as part of its initial cost saving program aimed to result in annual operating expense reductions of 300 million Euros by the end of the first half of the ongoing year, and it registered a total of 187 million Euros in restructuring charges. In addition, it also announced that 2,000 more people would be laid off globally, which should result in restructuring charges of 200 million Euros.
While the manufacturer's market share went down to 6 percent, registering a drop of 2 percentage points sequentially, the company predicts that the global handset market for 2009 will shrink by 10 percent from the total of around 1,190 million units shipped in 2008.