Sony Ericsson Reports 358m Euro Loss, Cuts 2,000 Jobs

From really bad to even worse...

Sony Ericsson has posted its “Q1 highlights” – an interesting choice of phrase…

Consequently ”highlights” include:

  • A loss of 358m euros in the last 3 months verses a profit of 184m euros one year ago
  • Shipped units down 35 per cent on Q1 2008 to 14.5m
  • Sales down 38 per cent to 1.7bn euros
  • Gross margin falling from 29 per cent to just 8 per cent

In short, not really any highlights at all. In fact, it’s simple fact that Sony Ericsson cannot continue to stay in business if it doesn’t turn these figures around.

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

As part of this cost saving the handset maker has also sadly made 2,000 of its global workforce redundant – a huge proportion for a company which employs less than 10,000. Sadly the reasons behind the decline are simple too: the phones it has made in recent years simply haven’t captured the imagination.

Could a last ditch attempt be made to save the company with the long rumoured PlayStation phone? Possibly, but either way don’t expect Sony Ericsson to exist in its current form this time next year…

”’Update:”’ It doesn’t look like Android is going to be the saviour for Sony Ericsson. Speaking to Reuters SE Chief Executive Hideki Komiyama admitted the company was a long way from having a market ready phone based on Google’s open source OS: “It does require a lot of evaluation, as well as a lot of testing, a lot of acceptance from a consumer viewpoint, and there is still some time to go,” he said. “Looking ahead I think that we see this as one of the important operating systems, there is no doubt.”

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