Sony Ericsson shrinks loss in second quarter

The fortunes of flagging handset vendor Sony Ericsson improved a little during the second quarter of 2009, with the firm reporting a loss of €213m, compared to a profit of €6m for the same period last year. Loss reported for the first quarter of 2009 was €293m.

But sales for the three month period to the end of June plummeted to €1.68bn, compared to €2.82bn in the second quarter of 2008.

Sony Ericsson shipped 13.8 million handsets during the quarter, a decrease of 43 per cent year on year and a sequential decrease of five per cent, due to continued challenging market conditions in all regions, particularly in Latin America.

“As expected, the second quarter was challenging and we still believe the remainder of the year will be difficult for Sony Ericsson. Our focus remains on bringing the company back to profitability and growth as quickly as possible, and our performance is starting to improve due to our cost reduction activities,” said Dick Komiyama, president of Sony Ericsson.

Komiyama said that cost reduction programs started in mid-2008, intended to reduce operating expenses by Eur880m are on track, with the full benefit expected to come in during the second half of 2010. Restructuring charges are estimated to be well within the previously announced Eur500m, including the already announced global workforce reduction of 2,350 people.

During the second quarter Sony Ericsson unveiled three new mobile phones: Aino, Satio and Yari, with a focus on social media applications. Last month, the company jumped on the app store bandwagon, announcing plans to distribute mobile applications via its PlayNow arena by teaming up with independent app store GetJar.

The company forecasts that the global handset market for 2009 will continue to contract by at least ten per cent from around 1.19bn units in 2008.

Sony Ericsson estimates that its market share was around five per cent in the second quarter, probably leaving it languishing in fifth position behind Motorola.