Sony Ericsson Q4 2008

Sony Ericsson finished its week on a low note with word of significant declines in the last quarter of 2008. The cellphone maker reports having shipped 24.2 million phones in the three-month span, a 6.2 percent drop versus the summer and a 27.3 percent plunge versus the same period a year ago. Its phone shipments for the year also registered a decline and fell to 96.6 million phones for all of 2008 compared to 103.4 million in 2007.

Financial losses also widened significantly in the October through December period. Sony Ericsson notes that its net losses grew from 25 million euros ($33.2 million US) to 187 million euros ($248.2 million) between summer and fall and that its performance has swung dramatically in the past year, falling from 373 million euros ($495 million) in operating profit at the end of 2007. Where the company recorded 1.1 billion euros ($1.5 billion) in profit during all of 2007, the firm now reports 73 million euros ($96.9 million) in losses for 2008.

The sudden drop is blamed primarily on the poor world economy, which Sony Ericsson claims is affecting even essential technology such as cellphones. Losses are also pinned on a steep drop in the gross profit margins on its phones, which plummeted from 32 percent in the fourth quarter of 2007 to just 15 percent a year later as exchange rates, the costs of restructuring and unexplained material write-offs ate into the company's effective income per phone.

Sony Ericsson's descent comes in spite of launching phones meant to rescue its stalled high-end market, including its flagship XPERIA X1 touchscreen smartphone and the C905 8-megapixel cameraphone. The firm has struggled to find acceptable software and design choices for its devices and has dropped the now defunct UIQ platform for Windows Mobile in the X1 and a future Android phone, with Symbian also expected in the future.

By Electronista Staff