Another profit warning from Sony Ericsson
The Financial Times is reporting that Sony Ericsson (SE), the world’s 5th largest handset maker, has announced that it will only break even in the second quarter of this year. This has been attributed to slower European sales of its mid and high-end mobile phones. The first quarter of this year has seen SE lose 11.1% of its market share, dropping from a global share of 9% to only 8%.
SE has been suffering from component shortages, such as screens and batteries, which have contributed to the delays in the new phones and thus their smaller profit-margins. Coupled with the Western hemisphere economic slowdown, especially in Europe, people are replacing their handsets less often. Furthermore, customers seem more willing to commit to longer phone contracts with their carrier of choice, which also decreases demand since they are due an ‘upgrade’ (new phone) less often.
SE predicts they will only move 24m handsets in Q2 with an average selling price of €115 per device. Despite their cutting edge R&D department creating new and stylish phones, such as the Xperia X1, we are unable to see how SE is going to increase its sales to match the drastic fashion in which they have fallen.
[Via FT]
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