Sony Ericsson Posts $384 Mln Loss, Plans to Cut 2,000 Jobs

Nokia's earnings may have been down 90 percent last quarter, but they still earned money: Sony Ericsson lost $384 million and plans to cut 2,000 positions.

Phone maker Sony Ericsson has announced its fiscal results for the first quarter of 2009…and the numbers aren’t pretty. The company reported a loss of €293 million during the quarter (that’s about $384 million USD), and to help cut costs and improve its bottom line the company plans to eliminate another 2,000 positions.

"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 a statement. "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 first quarter loss follows losses posted during the third and fourth quarters of 2008; the company had warned that its first quarter of 2009 would be weak due to recession impacting major economies around the world. Sony Ericsson has been criticized for primarily targeting the mid- the high-end of the mobile phone market, with average selling prices in its product line roughly double that of market leader Nokia; those sorts of luxury devices are often among the first things to be cut from budgets when consumers start to tighten their belt…although Apple’s decidedly not-cheap iPhone seems to be doing well.

Sony Ericsson is working to shift its product lines towards fast-growing emerging markets like India and China rather than relying on the essentially-saturated European market. However, industry watchers say Sony Ericsson has so far failed to differentiate its offerings sufficiently from its competition to have a big impact in developing markets.

Sony Ericsson estimates the global mobile phone market will contract as much as 10 percent in 2009, compared to 2008, owing to the economic slowdown.