Sony Ericsson (SE) has predicted a slide in its Q1 sales as competing manufacturers enter the mid- to high-end handset sector, and European consumers--where SE has above average market share, have called a halt to cell phone upgrades.
The company now forecasts that handset shipments will amount to around 22 million, while Q1 net income before tax is projected to reach €150-200 million, compared to €362 million a year ago. R&D costs are also predicted to be higher as SE attempts to broaden its product range to support an entry into new markets.
According to Ovum, the U.K.-based market research firm, this profits warning is bad news for parent companies Sony and Ericsson since SE's profit contribution is now material for both.
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