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Sony Ericsson warns of deepening losses

The handset manufacturer expects its losses in the first quarter of this year to double those it experienced in the previous quarter
Written by David Meyer, Contributor

Sony Ericsson has warned of worsening losses in its upcoming quarterly financial results, blaming weak consumer demand for a drop in sales.

In a statement released by the handset maker on Friday, Sony Ericsson said its results for the first quarter of 2009 would probably reflect losses of €340-€390m (£321m-£368m). Those results will come out on 17 April. In the previous quarter, the company lost €187m.

Sony Ericsson estimated it would ship around 14 million handsets during the quarter, with an average selling price of €120.

Gartner analyst Carolina Milanesi said in a separate statement that the global handset market "continues to be challenging", despite some signs of quarter-on-quarter improvement in China and India.

"Imaging and music are now features that most vendors have in their portfolio and this is making it more difficult for Sony Ericsson's products to stand out," Milanesi said. "Increased competition in Western Europe coupled with a slower market and the delay in adopting touchscreen devices are heavily impacting Sony Ericsson's performance."

In January, Milanesi warned that 2009 would be a deciding year for Sony Ericsson, after the manufacturer announced its losses for the fourth quarter of 2008. A week later, Ericsson — one of the joint venture's two parent companies — cited a "dramatic drop in the contribution" from Sony Ericsson as one reason why its profits for that quarter showed a 31 percent year-on-year fall.

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