Sony Ericsson to cut another 2,000 workers

The company shipped 35 percent fewer phones in the first quarter and lost market share

Struggling Sony Ericsson plans to cut another 2,000 jobs after shipments and market share dipped during the first quarter.

The announcement comes a day after number-one phone maker Nokia reported a 27 percent drop in sales but offered a glimmer of hope with expectations that next-quarter sales will be about the same or even slightly up compared to the first quarter.

A market improvement may not come fast enough for Sony Ericsson. It has already cut 2,000 workers after announcing it would late last year and now plans to cut as many more. Unit shipments for the first quarter dropped 35 percent compared to the same period last year. Sony Ericsson also lost two percentage points of market share compared to the previous quarter, now holding on to 6 percent of the market.

The company blamed continued weak customer confidence and de-stocking, where retailers and distributors clear out existing stock rather than order more, for its poor financial results.

A few recent high-level executive departures and persistent rumors about the future of the joint venture point to potential internal trouble at the company. Mats Lindoff, who had been CTO for six years, recently left the company, as did the head of Sony Ericsson's North America business.

Amid these challenges are rumors that Ericsson would like to exit the joint venture, leaving the company to be wholly owned by Sony. In response to the rumors, Ericsson has said that it is committed to the joint venture while Sony has declined to comment on the reports.

Like the other mobile-phone companies, Sony Ericsson is battling the ailing economy as well as new competitors, such as the iPhone. Sony Ericsson's touch-screen Xperia, hyped as an iPhone competitor, does not appear to be significantly boosting sales for the company.

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Nancy Gohring

IDG News Service
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