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January 23, 2010

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Cost cut helps Sony Ericsson slow losses

MOBILE phone maker Sony Ericsson yesterday said its fourth-quarter loss had narrowed 9 percent from a year ago to 167 million euros (US$235 million), as improved margins and lower costs offset a slump in sales.

The figure compared with a 187-million-euro loss last year, but sales fell 40 percent as the joint venture between LM Ericsson and Sony Corp was caught unprepared by consumers' rapid shift to touch screen phones.

Bert Nordberg, Sony Ericsson's new president, said that although he expects 2010 to be a challenging year, he is confident the group's cost-cutting measures and move toward more mid-range and high-end products has put the company "on the right track."

He highlighted recently announced products such as its Android-based phone XPERIA X10.

In the October-December period the company shipped 14.6 million units, up 3 percent from the third quarter but still down 40 percent from the same period a year ago.

For the full year 2009, the company made a net loss of 836 million euros, compared with a previous profit of 73 million euros.

In 2008, Sony Ericsson launched a cost-cutting program under which it had slashed its global workforce by about 2,500 people to 9,100 by the end of 2009.

Greger Johansson, a Stockholm-based analyst at research firm Redeye, said the results were overall better-than-expected, considering the group is actually narrowing its losses.

"The sales (figure) isn't excellent, but I think you have to view that as secondary right now. It's more important that the losses aren't growing," he said. "They might be able to swing to a profit in the latter part of 2010."



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