European phone manufacturer Sony Ericsson like their US competitors Motorola have hit the wall with the Company losing almost two-thirds of its share value during the past six months.
European phone manufacturer Sony Ericsson like their US competitors Motorola have hit the wall with the Company losing almost two-thirds of its share value during the past six months. Due to report in late April Sony Ericsson has warned that there is worse to come. The news comes as Asian brands like Samsung and LG start to take market share away from traditional mobile phone players.
The manufacturer suggested that unfavourable market conditions are hitting mid to high-end handset sales. Sony Ericsson said it expects around a 45% drop in net income compared with the first quarter of 2007.
Sony Ericsson has warned that first-quarter revenues will fall about 10% year-on-year. And, coupled with higher spending on research and development ahead of the introduction of several new phones later this year, operating margins will almost halve in the first quarter.
According to Mobile Today A slowing market looks partly to blame, with consumers taking longer to replace mobiles. A senior Sony Ericsson executive said: ‘As discussed during our fourth quarter of 2007, the market is proving to be challenging.
‘This has been more pronounced in the mid-high-end replacement sector of the market in Europe, where Sony Ericsson has stronger than average market share.’
Sony Ericsson plans to announce the first quarter results of 2008 in late April.
A big problem for traditional mobile phone Companies is tat Asian vendors lke Samsung have access to low cost manufacturing as well as components like memory and LCD screens thast the manufacture themselves. They are also investing in US and European designers to come up with a look and feel that will take carriers like Motorola and Sony Ericsson on.