Sony Ericsson Eliminates 2000 Jobs Amidst Profit Slump

Sony Ericsson has announced that it will be slashing another 2000 jobs, a fifth of its employees headcount, by 2010 as the number of phones it sold in Q1 2009 slumped significantly.

The company, created when Sony and Ericsson decided to merge their respective mobile arms, recorded a staggering $382 million losses on sales of $1.7 billion in the first quarter of 2009 alone. The number of mobile phones sold by the company fell to 15.4 million, a 35 percent decrease year on year.

More significantly though, Sony Ericsson's shipment seems to be shrinking faster (and more) than the global handset which is expected to shrink by only 10 percent in 2009. This means that Sony Ericsson is likely to fall even further behind the current top 3 - LG, Samsung and Nokia. Sony now owns only 6 percent of the global market share, a drop of 2 percent over previous estimates.

The average selling price of Sony Ericsson's mobile phones remained stable 120 Euros although it is important to bear in mind the significant fluctuations between the Euro and the Pound Sterling.

The 2000 pink slips will come as Sony Ericsson tries to reduce operating expenses by $520 million. It also comes nine months after the company slashed another 2000 jobs in an attempt to cut its outgoings by $300 million.

Sony Ericsson's president Dick Komiyama said in a statement that the company was trying to align its business to the new market reality with the aim of bringing the company back to profitability as quickly as possible.

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Our Comments

Sony Ericsson says that it saw some stabilisation in the demand for its phones. This statement echoes Nokia's but there is still more than 7 months before the year ends. By that time, the landscape will be different, some players like Palm or Motorola might not even be here.

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