Sony Ericsson to Cut a Further 2,000 Jobs

Sony Ericsson has announced its first quarter results, and reported a 35% slump in handset sales to 14.5 million units, although that is in line with guidance offered earlier this month. Sales for the quarter were EUR 1.74 billion (US$2.3 billion), a decrease of 36% from a year ago.

The company reported a net loss of EUR 293 million (US$387 million) for the quarter, reflecting a change in the product mix, material write-offs, and exchange rate volatility. The loss excluding restructuring charges was EUR 358 million (US$472 million).

The company has also announced a further 2,000 job cuts, on top of the 2,000 job cuts last year.

"As expected, the first quarter of this year has been extremely challenging for Sony Ericsson due to continued weak global demand. We are aligning our business to the new market reality with the aim of bringing the company back to profitability as quickly as possible," said Dick Komiyama, President, Sony Ericsson. "The management intends to pursue an additional cost saving program targeting a further annual operating expense reduction of Euro 400 million, to be completed by mid-2010."

The company's initial cost saving program targeting annual operating expense reductions of EUR 300 million by the end of the first half of 2009, including a workforce reduction of 2,000 headcount, has now been completed. A total of EUR 187 million restructuring charges have been recorded compared to the initial estimated costs of EUR 300 million. It is estimated that new restructuring charges of EUR 200 million will be needed to cover the costs of the new job cuts announced today.

Market share in the first quarter decreased and is now estimated to be around 6%, down two percentage points sequentially.

Sony Ericsson forecasts that the global handset market for 2009 will contract at least 10% from around 1,190 million units in 2008.

Posted to the site on 17th April 2009