Sony Ericsson hit by credit crunch

Mobile handset vendor Sony Ericsson reported a net loss of Eur73m for 2008, down from a profit of Eur1.1bn in the previous year.

Handset shipments spiralled down from 103.4 million in 2007 to 96.6 million in 2008, as the credit crunch hit home and consumer demand for new devices dried up.

The crucial Christmas period, which historically sees large numbers of handset shipments, was hit particularly hard in 2008, with Sony Ericsson moving just 24.2 million devices, compared to 30.8 million in the same period a year earlier.

Revenues fared slightly better, coming in at Eur11.2bn for 2008, compared to Eur12.9bn in 2007. The average selling price of a device also took a dive, from Eur125 down to Eur116.

“In economic terms, 2008 has been a tumultuous year with world markets experiencing a serious downturn. The mobile phone market has been greatly affected by this and as expected, the fourth quarter continued to be very challenging,” said Dick Komiyama, president of Sony Ericsson.

The vendor recently announced additional cost saving measures aimed at reducing operating expenses by a further Eur180m annually, with the full effect expected at the end of 2009.

At the end of last year, Sony Ericsson also announced that it joined the Open Handset Alliance and is currently developing a new phone that uses the Android Open Source software.