Open

Coming up

Don't miss

Replay


LATEST SHOWS

MEDIAWATCH

No strategy and a beige suit

Read more

THE WORLD THIS WEEK

The World This Week - 29 August 2014 (part 2)

Read more

THE WORLD THIS WEEK

The World This Week - 29 August 2014

Read more

ENCORE!

Alain Choquette: A Hilarious Magician in Paris

Read more

FOCUS

France welcomes Iraqi Christian refugees

Read more

FRANCE IN FOCUS

Emmanuel Macron: A new economy minister with a pro-business agenda

Read more

THE OBSERVERS

More of this year's best Observers stories

Read more

#TECH 24

Changing the world, one video game at a time

Read more

IN THE PAPERS

Socialist Party summer conference kicks off in explosive atmosphere

Read more

  • Exclusive: Fabius warns of further sanctions against Russia

    Read more

  • Experimental Ebola drug ‘ZMapp’ heals all monkeys in study

    Read more

  • British killer escapes from French psychiatric hospital

    Read more

  • Ukraine to relaunch NATO membership bid

    Read more

  • Police hunt for British boy with brain tumour taken to France

    Read more

  • Chelsea’s Torres set for AC Milan switch

    Read more

  • France shines in IMF list of world’s promising economists

    Read more

  • Mapping Ukraine: Canada and Russia in ‘tweet for tat’ row

    Read more

  • First case of Ebola confirmed in Senegal

    Read more

  • Obama has 'no strategy yet' on potential Syria strikes

    Read more

  • Netflix to woo French with ‘House of Cards’ set in Marseille

    Read more

  • French businesses ‘hoping for a new Thatcher’

    Read more

  • Syrian refugees surpass 3 million, UN says

    Read more

  • West backs Ukrainian claims of Russian incursion

    Read more

  • Libyan PM resigns as Islamists set up rival administration

    Read more

  • UN says 43 peacekeepers captured in Golan Heights

    Read more

  • The deleted tweets of Manuel Valls

    Read more

  • Peru seizes record 6.5 tonnes of Europe-bound cocaine

    Read more

  • Pakistan army to mediate between PM, protesters

    Read more

  • In pictures: Billions of locusts invade Madagascan capital

    Read more

Sony Ericsson to cut 2,000 jobs worldwide

Latest update : 2008-07-18

Mobile phone maker Sony Ericsson announced plans to cut 2,000 jobs worldwide after it reported a quarterly loss of two million euros due to difficult market conditions in its traditional European outlets.

Mobile phone maker Sony Ericsson announced Friday it was cutting 2,000 jobs worldwide after reporting an operating loss in the second quarter due to difficult market conditions and the global economic slowdown.
   
"We're going to cut 2,000 jobs within a year all over the world, out of 12,000 employees," spokeswoman Susanne Andersson told AFP.
   
Sony Ericsson posted an operating loss of two million euros (3.1 million dollars) in the second quarter, compared to a profit of 315 million euros in the same period of last year.
   
Net profit plunged by 97 percent to six million euros from 220 million a year earlier, while sales fell by 9.4 percent to 2.82 billion euros.
   
In a statement presenting its second quarter earnings, the group announced a restructuring programme aimed at cutting operating costs.
   
"Our target is to achieve a reduction in operating expenses of 300 million euros annually, with the full effect expected to appear within a year," Sony Ericsson chief executive Dick Komiyama said.
   
"The measures we are taking are aimed at becoming a faster, more agile and more cost efficient organisation that can continue to create innovative products that excite consumers," he said.
   
The group has for the past year been trying to develop its business on fast-growing emerging markets in order to reduce dependence on its traditional, near-saturation European outlets.
   
As a result it has sold more low-end phones, where prices are lower and the competition is tougher than in the high-end segment, the company said.
   
But Sony Ericsson has been hit by a double whammy: it is suffering from the economic slowdown in Europe, and at the same time it lacks the products and volumes necessary to make a splash in emerging markets such as China and India.
   
"The market in general is much, much worse than one or two years ago. And secondly the products Sony Ericsson has today are not as strong as they used to be," analyst Greger Johansson at Redeye told AFP.
   
"Sony Ericsson is not big enough in Western Europe and in the mid- to high-end segment. So we are seeing a slowdown in Western Europe and in this higher market," Michael Andersson, analyst at Evli Bank, said.
   
"That creates a problem right away because Sony Ericsson doesn't have (a strong enough) low-end or the global offering," he added.
   
Andersson said Finnish rival Nokia went through a similar phase several years ago, when sales of its high-end phones began to flag in Western Europe.
   
But it was able to compensate for the fall by strong sales in emerging markets, which made it possible to maintain strong margins.
   
With its late entry on emerging markets Sony Ericsson has been forced to reduce its average selling price for handsets, which fell to 116 euros from 125 euros in the second quarter last year, weighing down profits.
   
"It's a big problem for them because they are very dependent on the Western European market and Nokia is very dominant on the emerging markets," Andersson said.
   
The analysts said they saw Sony Ericsson's restructuring plan as "necessary."
   
At the end of June, Sony Ericsson had eight percent of the mobile phone market, compared to Nokia's 40 percent.
   
Sony Ericsson, which is not quoted on the stock market, was formed in 2001 through the merger of Ericsson of Sweden, world leader in mobile phone networks, and Japanese electronics giant Sony.
   
On the Stockholm stock exchange exchange, the Ericsson share closed up 3.58 percent at 72.30 kronor in late afternoon trading, in an overall market up by 2.64 percent.

Date created : 2008-07-18

COMMENT(S)