Sony Ericsson Issue Profits Warning As Demand Falls

Mon, 30 Jun 2008

Mobile phone manufacturer Sony Ericsson has warned investors that its profits will fail to meet analysts’ forecasts due to a decline in demand for high-end phones, product delays, and a "challenging" market environment .

The company, a joint enterprise between electronics giant Sony and telecoms equipment maker Ericsson, said gross margins had weakened and will continue "to decline both year over year and sequentially".

Sony Ericsson added that it expects to break even in the second quarter of the year (from April to June), with around 24 million phones shipped out at an estimated average selling price of 115 euros.

Analysts were prepared for softer market conditions after a weak first quarter for the firm and continued signs that consumer spending is being hit by global market turmoil. But last week’s announcement has intensified the gloom in the sector.

"It looks like the quarter will be softer than we expected," Gartner analyst Carolina Milanesi commented.

Sony Ericsson results are due to be released on July 18.

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