updated 10:25 am EDT, Wed March 19, 2008
Sony-Ericsson Profit Drop
Sony-Ericsson will see lower profits than expected in its next quarter due to a drop in sales of mid- and high-end phones, the company has revealed today. The cellphone partnership now expects to sell a comparatively modest 22 million phones between January and March and should see reduced income as well as a lower average phone price of 120 ($188), showing an emphasis on low-cost phones. The dip is largely attributed to struggling sales in Europe, where Sony-Ericsson has often had its best market success but where it also faces its stiffest competition. Moves are underway to escape dependence on the region but are not far along enough to have affected near-term results.
"For the last year, Sony Ericsson has been focused on expanding the breadth of its portfolio and developing its presence in new markets to lessen its historic reliance on the European high-end sector for growth," company chief Dick Komiyama says. "This strategy will continue, and our objective remains to become a top three player globally by 2011."
The senior executive also noted that some of the drop in net income would come from research meant to help grow Sony-Ericsson's business.
The union between Japanese and Swedish companies has often held fourth place in the cellphone market versus larger but older players such as Nokia and Samsung, but has often fought to gain acceptance for its smartphones versus the more popular Nokia Eseries and Nseries devices that often dominate European sales, including home users. Sony-Ericsson's unveiling of the Xperia X1 is seen as a crucial move for the company both as an attempt to upset Nokia's position with a Windows Mobile device as well as a gesture to head off the threat of the iPhone with a similar, media-focused touchscreen device.