Monday, January 19, 2009

Sony Ericsson posted loss. The company is undergoing massive re-structure

In the fourth quarter of 2008, famous mobile phone maker, Sony Ericsson observed a loss of $245 million. The ongoing economic recession badly affected the company’s profit. In the fourth quarter of 2007, the company posted a profit of $495 million. Compared to this figure, $245 million shows a drastic drop in its profit. Due to job loss and economic difficulty, people are not spending much money on mobile phones. The major weakness of Sony Ericsson is that the company does not produce any entry level mobile phones like Samsung, Nokia or Motorola. In the fourth quarter of 2008, Sony Ericsson shipped 24.2 million phones. Compared to 2007, this is a 21% drop. Dick Komiyama, President, Sony Ericsson said:

"In economic terms, 2008 has been a tumultuous year with world markets experiencing a serious downturn,……We foresee a continued deterioration in the marketplace in 2009, particularly in the first half."

Recently, the company released Xperia X1 and another 8.1-megapixel camera phone but they failed to capture consumers’ attention. It also started to offer a new “food-ordering service” within fast-food restaurants called “EZ Pass environment.”

It is not only Sony Ericsson that is suffering from this problem. Other mobile companies are also expecting a contraction in the cell-phone market. In order to survive these tough economic times, Sony Ericsson is undergoing a massive re-structure. It already laid-off 2000 employees and the president said that more people would be removed from the company. It is currently working to achieve a cost saving goal of $398 million.

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