Sony Ericsson issues profit warning

Sony Ericsson issues profit warning
Mobile phone maker Sony Ericsson warned investors on Friday that its first quarter profits wouldn’t meet expectations, as a slump in global demand hit the company's sales and earnings.

Sony Ericsson said that “net sales and net income before taxes in the first quarter of 2009 continue to be negatively affected by weak consumer demand as well as de-stocking in the retail and distribution channels.”

The company is due to announce its first-quarter results on April 17.

Sony Ericsson reported a net loss of €73 million ($100 million) in 2008, with the fourth quarter alone showing losses of €187 million and a drop in sales of 22 percent.

The company has announced massive cost-cutting measures.

Sony Ericsson also said it “plans to ship approximately 14 million phones during the first quarter of 2009 with an estimated average selling price of €120,” compared to the 22.3 million phones sold at an average price of €121 in the first quarter last year.

Sony Ericsson also warned that its first quarter “gross margin is expected to decline both year-on-year and sequentially.”

And its “net income before taxes is estimated to be a loss in the range of €340-390 million, (and) excluding restructuring charges in the range of €10-20 million,” it said.

The profit warning came amid several days of media speculation in Sweden that the company was considering splitting the Japanese-Swedish venture that was created in 2001.

Ericsson chief Carl-Henric Svanberg however continues to maintain that his company is committed to a long-term involvement in the joint-venture.

Sony Ericsson remains unlisted, but Ericsson saw its share price dive 7.65 percent to 70 kronor ($8.62) in midday trading on the Stockholm stock exchange, where the OMX30 index was down 1.75 percent.