Sony Ericsson profits take a dive

Sony Ericsson’s CEO said on Thursday that his company faced “difficult” times, as falling handset sales dented the mobile phone maker’s second quarter earnings.

Sony Ericsson profits take a dive

Dick Komiyama’s comments came after the Swedish-Japanese joint venture announced losses of €213 million ($301 million), compared to a €6.0 million profit a year ago.

“As expected, the second quarter was challenging and we still believe the remainder of the year will be difficult for Sony Ericsson,” Komiyama said in a statement.

The results were, however, a slight improvement from those in the previous quarter when the company posted losses of €293 million.

Komiyama said Sony Ericsson would aim to return to profitability and growth “as quickly as possible” through its “ongoing cost savings program.”

For the period from April 1 to June 30, the company posted sales of €1.68 billion, down 40 percent from 2.82 billion for the same period last year.

Sales of its handsets are also on the slide.

Sony Ericsson said it had sold 13.8 million handsets in the second quarter, giving the company an estimated five-percent share of the global market.

That represents a drop the same time in 2008 when it sold 24.4 million handsets worldwide.

Industry watchers say Sony Ericsson has been overtaken by the success of the new “smartphones”, such as the Blackberry and Apple’s iPhone, which feature high-speed internet access.

The Swedish-Japanese company had previously built its reputation and growth on premium products until some two years ago when it moved towards making more low-cost handsets.

It was a strategy devised to win sales in emerging markets such as China and reduce its reliance on Europe and the US.

Sony Ericsson, the fifth largest manufacturer of mobile telephones in the world by market share, is not listed individually on any stock exchange as its accounts listed under parent companies Ericsson and Sony.

Sony Ericsson was not the only mobile handset maker to announce falling sales and profits on Thursday. Finland’s Nokia reported a 66-percent collapse in quarterly profit to €380 million.

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Ericsson suspends all Russia operations indefinitely

Swedish network equipment maker Ericsson said Monday that it was suspending all of its Russian operations over the war in Ukraine for the foreseeable future.

Ericsson suspends all Russia operations indefinitely

The telecom giant already announced in late February that it would stop all deliveries to Russia following Moscow’s February 24 invasion of Ukraine.

“In the light of recent events and of European Union sanctions, the company will now suspend its affected business with customers in Russia indefinitely,” Ericsson said in a statement.

The company added that it was “engaging with customers and partners regarding the indefinite suspension of the affected business.”

“The priority is to focus on the safety and well-being of Ericsson employees in Russia and they will be placed on paid leave,” it said.

READ ALSO: How has Sweden responded to Putin’s war in Ukraine so far?

Hundreds of Western firms ranging from Ikea to Coca-Cola, Goldman Sachs and McDonald’s have stopped operations in the country since the invasion, with French banking group Societe Generale announcing Monday it was selling its stake in Russia’s Rosbank.

Ericsson has around 600 employees in Russia, and is a “major supplier to the largest operator MTS and the fourth largest operator Tele2,” a company spokeswoman told AFP, adding that together with Ukraine, Russia accounts for less than two percent of revenue.

As a result, the equipment maker said it would record a provision for 900 million Swedish kronor ($95 million, 87 million euros) for the first quarter of 2022 for “impairment of assets and other exceptional costs,” though no staff redundancy costs were included.
Ericsson is due to publish its first quarter earnings on April 14.