Sony Ericsson, which is cutting RTP work force, swings to quarterly loss

Posted October 17, 2008 5:47 a.m. EDT
Updated October 17, 2008 11:16 a.m. EDT

— Mobile phone maker Sony Ericsson on Friday said it swung to a loss in the third quarter, hurt mainly by weaker sales, continued price pressure on its handsets and negative effects from exchange rate fluctuations.

On Sept. 29, the company said it would lay off some 450 employees at its North American headquarters in Research Triangle Park, N.C. The cuts were part of the 2,000 reductions to be made across the firm.

The LM Ericsson and Sony Corp. joint venture said it booked a net loss of 25 million euros ($33.6 million) for the quarter, compared with a profit of euro267 million in the same period last year.

It said it shipped 25.7 million units during the third quarter, which was lower than the quarter before but flat year-on-year.

The company said that although it expects the global handset market for 2008 to grow at a rate of around 10 percent, from more than 1.1 billion units in 2007, it believes the industry average selling price will continue to drop.

Most of the growth is expected to come from emerging markets, where the cheaper phones dominate, it said.

Sales dropped about 10 percent in the July-September period, landing at 2.81 billion euros ($3.8 billion).

Sony Ericsson President Dick Komiyama said the quarter had "continued to be challenging."

He said the company's target to cut operating costs by 300 million euros ($405 million) a year by the end of the second quarter next year – with the full effects expected to appear in the second half of 2009–- "are progressing in line with expectations."