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* JANUARY 16, 2009, 3:09 P.M. ET
Sony Ericsson Swings to Loss Amid Weaker Sales
By GUSTAV SANDSTROM
STOCKHOLM – Mobile-phone maker Sony Ericsson Friday said it swung to a fourth-quarter net loss of €187 million ($246 million), from a €373 million profit a year earlier, as contracting consumer demand and decreased availability of credit hit its sales. It warned the market is set to worsen this year.
"As expected, the fourth quarter continued to be very challenging for Sony Ericsson," the company said.
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Sony Ericsson, a joint venture between Sony Corp. of Japan and Telefon AB L.M. Ericsson of Sweden, said it expects a continued deterioration in the market place in 2009, particularly in the first half.
Analysts have predicted that the global cellphone market will contract in 2009 for the first time since 2000-2001 as the economic slowdown hits consumer spending. Finland's Nokia Corp. also warned in December that it expects global handset volumes to fall 5% or more in 2009 from a year earlier.
Sony Ericsson shipped 24.2 million phones in the three months to Dec. 31, down from 30.8 million a year earlier. Its net sales fell 23% to €2.91 billion, from €3.77 billion, while the average selling price for its handsets decreased to €121 from €123.
See what to expect in the quarterly reports of major corporations.
The company's estimated market share for the fourth quarter came in at around 8%, down from 9.4% in the fourth quarter of 2007, but largely unchanged from 8.1% in the third quarter of 2008.
Sony Ericsson booked one-off charges of €129 million in the fourth quarter for its ongoing restructuring scheme, which targets annual cost-savings of €300 million by mid-2009. The company said it has initiated additional annual cost savings of €180 million, with full effect expected by the end of 2009.
"The report was weaker than expected," said analyst Greger Johansson at Redeye. "It looks worrying for the coming year." But he added that the plans for additional cost cuts, which should be necessary given the circumstances, will be welcomed by the market.
In early morning trading in Stockholm, shares in Ericsson, which owns 50% of the handset maker, were up 0.9%, underperforming a 1.7% rise in the wider market in Stockholm. Meanwhile, shares in Nokia traded up 2.1%, in line with the broader Helsinki market.
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