Sony Ericsson issues profit warning

Sony Ericsson says that its second-quarter sales and net income will take a hit because of slowing demand for its mobile phones and new product shipping delays. The handset maker estimates it will just break even in the second quarter.

The company says demand for high-end phones is challenging and predicts it will ship about 24 million phones in the quarter with an average selling price of about $181 each. This compares to first quarter when Sony Ericsson shipped 22.3 million units with an average selling price of $190.50.

This is the company's second profit warning this year and is a sign that the joint venture is still having problems in this fiercely competitive sector. The warning is also an indication that mobile phone sales are not responding well to the economic downturn. Earlier this week several brokerage firms reduced their 2008 handset sales forecasts and predicted that many manufacturers would feel the pinch through the end of the year.

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