Losses continue for Sony Ericsson

The company needs more new phones to turn around its fortunes, analyst says

Mobile phones manufacturer Sony Ericsson Mobile Communications' third-quarter sales dropped by 42 percent compared to the same period last year, while its net loss increased sixfold.

Sales for the third quarter were €1.6 billion (US$2.4 billion), compared to €2.8 billion a year earlier. The company's net loss for the quarter increased to €164 million from €25 million a year earlier, while the number of phones sold dropped from 25.7 million to 14.1 million, it said Thursday.

Between the second and third quarters, Sony Ericsson increased the number of phones sold by 2 percent or 300,000 phones. But that still trails the 7 percent increase for the market as a whole estimated by Nokia, and the average price of the phones Sony Ericsson sold dropped €8 between the second and third quarters. Sony Ericsson has also cut its losses by €49 million compared to the second quarter.

Sony Ericsson has high hopes for three new phones now going on sale, the Satio, the Yari and the Aino. The phones are a step in right direction, but they won't be enough to turn around its fortunes, according to Carolina Milanesi, research director at Gartner.

The company needs to follow up the introduction of these phones with more new devices, according to Milanesi. Its portfolio still lacks a cheaper phone with a QWERTY keyboard. That Sony Ericsson stopped making Blackberry-like phones just as that form factor started to get hot was a big mistake, Milanesi said.

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Mikael Ricknäs

IDG News Service
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