Sony Ericsson warns of slower sales

19-03-2008

by Ciara O'Brien

Sony Ericsson has warned that slower growth in mid-to-high-end mobile phones could hit net sales and income in the first quarter of 2008.

The phone manufacturer, which is a joint venture between Japanese firm Sony and Sweden's Telefon AB LM Ericsson, also said that a shortage of components for popular mid-priced phones has also hit sales growth -- described as "modest" -- in the three-month period.

The company is estimating that 22 million phones will be shipped during the first quarter of 2008, selling at an average of EUR120. This adds up to a lower net sales figure than that of the same period in 2007, with net income before taxes (NIBT) predicted in the EUR150 million to EUR200 million range.

Increased R&D expenses are also expected to negatively impact figures. Gross margin is predicted to remain relatively stable for the quarter, compared with the first quarter of 2007.

Dick Komiyama, president of Sony Ericsson, said in a statement that the market was "challenging". "This has been more pronounced in the mid-to-high end replacement sector of the market in Europe, where Sony Ericsson has stronger than average market share," he said.

The company has pledged to continue its strategy of reducing its dependence on the European market, expanding into new markets, and is planning to become one of the top three mobile phone makers in the world by 2011.

It currently lags in fourth place behind Nokia, Motorola and Samsung. To achieve this goal, the company has introduced 15 new handsets this year and brought in the Windows Mobile platform to its products range, a move that it is hoping will yield benefits in the second half of 2008.