Sony Ericsson slips into the red

The handset manufacturer has begun losing money, but hopes to regain profitability through its cost-cutting programme

Sony Ericsson is now losing money, its latest quarterly results show.

The results for the third quarter of 2008, posted on Friday, indicate a €25m (£19m) loss. The corresponding quarter last year showed profits of €267m.

The results continue a decline marked in the second quarter of this year, where Sony Ericsson barely broke even. The firm has, however, launched a cost-cutting programme, much of it focused on shedding thousands of jobs. According to Sony Ericsson president Dick Komiyama, the company hopes this will help it get back in the black.

"As expected, the third quarter has continued to be challenging for Sony Ericsson," said Komiyama in a Friday statement. "We have moved forward with our plans to align operations and resources with the consolidation of R&D facilities into a more agile and cost-efficient organisational structure. As previously announced, our target remains to reduce operating expenses by €300m annually by the end of the second quarter 2009, with the full effects expected to appear in the second half of 2009."

Komiyama said the plans were "progressing in line with expectations", and suggested Sony Ericsson was "committed to executing our alignment plan as speedily as possible to ensure we have the right size and organisational structure to return the business to healthy profitability".

As with Nokia's Thursday results, Sony Ericsson's posting revealed a fall in the average selling price for its handsets — €109, as opposed to €116 in the previous quarter. "This is due to selling more lower-priced phones and increased price competition in the market for mid- to high-end phones," the statement read. "Sequentially, market share for the third quarter remained flat and is estimated to be around eight percent."

Sony Ericsson lost money despite selling more phones than in the last quarter — 25.7 million, up from 24.4 million.