Lower sales push Sony Ericsson into the red

Mobile handset maker Sony Ericsson has reported a significant loss in the fourth quarter of 2008, caused, the company said, by lower sales and profit margins. Losses in the quarter amounted to 187 million euros compared to a profit of 373 million euros for the same quarter in 2007. On the full year Sony Ericsson reported a loss of 73 million euros, a massive turnaround from its 1.1. billion euros profit in 2007.

Sales in the fourth quarter were down 23 per cent year-on-year at 2.9 billion euros. Gross profit margins fell from 31 per cent in 2007 to 22 per cent in 2008 with the last quarter falling more sharply to 15 per cent. The company shipped 24.2 million phones in the fourth quarter a year-on-year decrease of 21 per cent. Sony Ericsson maintained its market share at around 8 per cent in Q4 2008. The company says it can foresee a continued deterioration in the market place in 2009, particularly in the first half of the year.

"Sony Ericsson's sales for the fourth quarter of 2008 came in at the low-end of our expectations," said Gartner research director Carolina Milanesi. "The market in the last quarter of 2008 continued to be very challenging especially for Sony Ericsson which remains particularly exposed to the weakness of the Western European market. We continue to believe that maintaining the third position in the worldwide ranking achieved in the third quarter of 2008 will be very difficult for Sony Ericsson."

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