Sony Ericsson has released its Q2 figures and they make dismal reading. Sales are massively down and losses are up, writes Martyn Warwick.
The newly published report shows that in the three months to June 30 this year, Sony Ericsson shipped 13.8 million handsets, down a whopping 43 per cent on the same period last year and five per cent down on Q1 this year.
Revenues too are spectacularly lower. At €1.68 billion they are 40 per cent adrift from the same quarter in 2008. Stating the blatantly obvious, the company says the fall is due to "challenging market conditions" in all regions in general and in Latin America in particular.
And as sales flag, Sony Ericsson's losses continue to mount. Q2's operating loss totaled €274 million. It was €369 million in Q1 2009 and just €2 million in Q2, 2008. The company also reports a net loss of €213 million. The company lost €293 million in Q1 and last managed to turn a small (€6 million) net profit way back in Q2, 2008.
In what, quite frankly, looks like grasping at straws in a desperate effort to spin some minimal good news out of what is pretty much an unmitigated disaster, Sony Ericsson insists that losses have "narrowed slightly" due to improved gross margins and a brutal cost-savings regime.
Well, it's true that the average selling price of a Sony Ericsson handset has improved from €120 in Q1 this year to €122 in Q2, but that's not going to set the world on fire.
The fact of the matter is that to survive Sony Ericsson is going to have to take some very tough actions. The company claims that its current plan to cut costs by €880 million is "on track" although the full benefits from this will not "come through" before late 2010. That leaves the company facing at least another four or five quarters of similarly bad and potentially even worse figures. More than 2,500 jobs have already gone and it seems that more will have to follow.
Indeed the company's forecasts remain resolutely gloomy. It is sticking to its prediction that the global handset market will shrink by a minimum of 10 per cent this year and says that the rest of the current financial year will remain "very difficult".
Sony Ericsson claims that its global market share topped out at "just above" five per cent in Q2, but that claim is not yet verifiable as all the numbers from other manufacturers are not yet in.
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