Sony Ericsson warns on Q1 as European markets slow
Written on March 20, 2008
Mobile phone maker Sony Ericsson warned on Wednesday first-quarter earnings could fall by more than half, adding to growing gloom in the handset sector and dealing co-parent Ericsson (ERICb.ST: Quote, Profile, Research) a fresh blow.
A global economic slowdown is starting to crimp consumer spending, hurting the whole sector. Last week, chip maker Texas Instruments (TXN.N: Quote, Profile, Research) cut its first-quarter forecasts, citing weaker demand for chips used in higher-priced 3G phones.
“It is natural in consumer electronics that when consumer uncertainty increases, they maybe postpone purchases or buy lower-end models,” said Janne Rantanen, analyst at Swedish bank Carnegie.
Ericsson shares were down 7.3 percent at 5:17 a.m. EDT, hovering near a 4-1/2 year low and bringing losses in the last few months to around 60 percent. Nokia (NOK1V.HE: Quote, Profile, Research) fell 3.4 percent payday loan. More than 67.6 million Ericsson shares traded in the first hour, over half the average daily volume this year.
“The market is proving to be challenging,” said Sony Ericsson President Dick Komiyama.
Net income before tax at the venture, owned by Ericsson and Sony Corp (6758.T: Quote, Profile, Research), is set to be 150 million euros ($237.2 million) to 200 million euros in the first quarter.
That compares with 362 million in the year-earlier quarter, although Sony Ericsson said its gross margin would remain the same on the year-ago level, which was 30.3 percent.
“This is clearly a big profit warning with earnings pretty much half of what was expected,” said an analyst who asked not to be identified.
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