Will Sony Ericsson layoff additional 2,000 jobs?

Sony Ericsson Mobile Communications Ltd, the mobile-phone venture of Sony Corp and Ericsson AB, said it will cut an additional 2,000 jobs to revive profit amid falling demand.

The measure will reduce costs by 400 million euros ($524 million) annually by mid-2010 and cost 200 million euros to implement, Sony Ericsson said in a statement. It follows a plan announced in July to slash 2,000 positions to save 300 million euros, which has been completed, and another unveiled in January to reduce costs by 180 million euros by the end of 2009.

Sony Ericsson reported its third straight quarterly loss today after it slipped to fourth place in global handset shipments at the end of last year. The London-based company has suffered as consumers snapped up touchscreen models from competitors such as Apple Inc with its iPhone.

“As expected, the first quarter of this year has been extremely challenging for Sony Ericsson due to continued weak global demand” Chief Executive Officer Dick Komiyama said in the 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.”

Third loss

The first-quarter net loss was 293 million euros, compared with a profit of 133 million euros a year earlier, the company said. Sales fell 36 per cent to 1.74 billion euros.

Analysts in an SME Direkt survey predicted a 293 million- euro net loss on sales of 1.68 billion euros, based on 28 estimates.

Sony Ericsson’s gross margin, or sales minus manufacturing costs, narrowed to 8.4 per cent in the quarter from 29.2 per cent a year earlier.

Restructuring charges for the first two cost-cutting programmes will stay within the 300 million-euro sum set aside in July to pay for the measures, the company said.

The venture shipped 14.5 million phones, a 35 per cent drop from a year earlier. The company estimated its market share fell two percentage poi
nts to 6 per cent from the fourth quarter. The average selling price of its handsets fell to 120 euros from 121 euros in the fourth quarter as well as the year-earlier period.

Sony Ericsson predicts global industry handset unit sales will shrink at least 10 per cent this year from the 1.19 billion sold in 2008. Nokia Oyj, the world’s largest mobile-phone maker, yesterday reiterated its forecast of about a 10 per cent drop in the global handset market.

Nokia reiterated its margin targets for the year after announcing job cut programmes that will cover about 3,000 employees. The Espoo, Finland-based company’s first-quarter net income declined 90 per cent to 122 million euros.

Agencies