Sony Ericsson sounds an ominous warning
Published: Sat, Jun. 28, 2008 12:30AM
Modified Sat, Jun. 28, 2008 02:20AM
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closeLONDON -- Mobile phone maker Sony Ericsson, which has its U.S. headquarters in Research Triangle Park, warned Friday that it will just break even in the second quarter as worsening market conditions cut into sales.
Shares of the London-based company tumbled nearly 10 percent.
Ericsson cited "moderating demand" for mid- to high-end mobile phones, as well as delays in the quarter in the shipping of new products. Sony Ericsson has suffered as consumers opt for cheaper models and rivals including Nokia and Apple Inc. introduce more expensive phones.
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The company said it would break even before taxes.
"To hear that they will only break even in the quarter is pretty shocking," analyst Nicolas von Stackelberg in Frankfurt told Bloomberg News. "They didn't come out with new products in the quarter and they participated in price cuts, which killed their margins."
In February, Sony Ericsson officials said the company would add 100 local employees this year to bring its total here to 850.
Friday's news was Sony Ericsson's second profit warning this year. In March it warned of similar problems, which led to the company reporting a 48-percent drop in first-quarter net profits.
Sony Ericsson reports second-quarter results on July 18.
The news comes on the heels of disappointing results Thursday from Treo smart-phone maker Palm Inc. Also this week, Blackberry maker Research In Motion Ltd. reported quarterly profit that missed analysts' expectations.
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