Sony Ericsson profits collapse

Sony Ericsson profits collapse
Swedish-Japanese mobile phone maker Sony Ericsson reported on Friday that second quarter net profits had plunged to €8 million ($12.64mn). This represents a significant drop on the €327 million reported in the second quarter of 2007.

The collapse in profits was expected by analysts however as Sony Ericsson had issued a profits warning to that effect in June.

Total sales amounted to €2,820 million in comparison with €3,112 million in the second quarter of 2007.

The firm announced a savings program to address plunging profitability and to cut annual costs by €300 million.

“We are aligning our operations and resources worldwide to meet an increasingly competitive business environment and to help restore our capability for profitable growth. The measures we are taking are aimed at becoming a faster, more agile and more cost efficient organisation,” Dick Komiya, Sony Ericsson President said in a company press release.

The company sold 24.4 million telephones during the quarter, in comparison with 24.9 million in the corresponding period of 2007. The average retail price dipped from €125 to €116.

Sony Ericsson forecast that the worldwide mobile phone market would grow by around 10 percent during during 2008 in unit sales terms. 1.1 billion telephones were sold worldwide in 2007.

Sony Ericsson reported a market share of around 8 percent.