Sony Ericsson troubles escalate, company issues profit warning

Sony Ericsson's financial troubles aren't improving. The company today issued a profit warning saying that its first quarter net sales and net income before taxes continue to be negatively affected by weak consumer demand. Specifically, Sony Ericsson said it expects its first-quarter pretax loss to be between $464.9 million to $533.2 million, well below market expectations. The company also said it plans to ship around 14 million phones during the quarter. The firm's first quarter results will be announced April 17.

The company, which is a joint venture between Ericsson and Sony Corp, has been plagued by speculation that Ericsson wants out of the partnership. Earlier this week, a German magazine provoked a wildfire of speculation over the likely breakup of the partnership. The article talked of Ericsson wanting to dissolve the agreement, and Sony opening negotiations with banks to raise the necessary financing to acquire the 50 per cent stake owned by Ericsson.

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