Technology Word

Mobile phone maker Sony Ericsson on Wednesday warned that falling growth in the market for mid- and high-range handsets would have a negative impact on its sales and profits in the first quarter.
The joint venture between Sweden’s LM Ericsson and Japan’s Sony Corp. said shortages in certain components for mid-priced phones also were expected to affect sales growth in the period.
The company is due to release its earnings for the first quarter on April 23, and said it expects to report around 22 million shipped phones - leading to lower net sales compared with the same quarter a year earlier.
Pretax profit was expected to be between 150 million euros and 200 million euros ($235 million and $315 million), down from 362 million euros in the quarter a year ago because of higher research and development costs.
The company added, however, that it still expects its gross margin for the three-month period to stay relatively stable compared with the same period in 2007.
Sony Ericsson President Dick Komiyama said “the market is proving to be challenging. This has been more pronounced in the mid- to high-end replacement sector of the market in Europe, where Sony Ericsson has stronger than average market share.”
He added that for the last year, his company has focused on expanding its portfolio and its presence in new markets in a move to reduce its reliance on the European high-end sector for growth.
“This strategy will continue, and our objective remains to become a top three player globally by 2011,” he said.
Komiyama said his company expects to start seeing the positive effects of recent mobile phone and platform launches in the second half of 2008.

via AOL

(Adds detail, background, analyst comment.)

By Adam Ewing

Of DOW JONES NEWSWIRES

STOCKHOLM -(Dow Jones)- Sony Ericsson Wednesday said slowing market growth of mid-to-high end phones will negatively impact sales and net income before tax for the first quarter of 2008.

Sony Ericsson, a joint venture between Japan’s Sony Corp(SNE) and Sweden’s Telefon AB LM Ericsson Co. (ERIC) said certain component shortages for popular mid-priced phones had contributed to modest unit sales growth in the first quarter.

“As discussed during our fourth quarter 2007 Media and Analyst Call, the market is proving to be challenging,” said Dick Komiyama, President of Sony Ericsson. “This has been more pronounced in the mid-to-high end replacement sector of the market in Europe, where Sony Ericsson has stronger than average market share.”

Koyama said Sony Ericsson will continue to try to reduce its dependence for growth on the European high-end sector and would continue with its plan to develop its presence in new markets.

“This strategy will continue, and our objective remains to become a top three player globally by 2011,” Komiyama said.

Mobile device unit sales are seen falling on slowing consumer spending in developed countries.

In a sign of this slowing demand, mobile chip manufacturer Texas Instruments Inc. (TXN) last week trimmed its financial forecasts amid weakening demand for the high-end and third-generation, or 3G, handsets for which it makes chips. The company noted that one large customer had made a “significant downward revision in wireless customer demand.” Though it didn’t name the customer, shares in Nokia Corp. (NOK), the world’s largest mobile device maker with some 40% of the market, fell in the wake of the comments.

Sony Ericsson is the fourth largest phone maker globally with 8.8% of the market in the fourth quarter, according to research firm Gartner, behind second placed Motorola Inc. (MOT) of the U.S. and third placed South Korean Samgsung ( 6758.TO). Sony Ericsson makes a large proportion of its sales from higher end devices.

London-based Nomura analyst Richard Nomura said last week Sony Ericsson was the most likely to be affected by slowing consumer demand due to its relatively large exposure to this high-end segment.

Sony Ericsson said Wednesday it now plans to ship some 22 million phones during the first quarter of 2008 with an estimated ASP, or average selling price, of EUR120.

This is expected to generate net sales lower than the first quarter of 2007, and net income before taxes is estimated to fall in a range of between EUR150 million to EUR200 million compared with the EUR362 million reported in the same quarter last year, due to increased research and development expenses as a percentage of sales, the company said.

Sony Ericsson said increased R&D investments are in line with its strategy to meet future growth ambitions. Its gross margin is expected to remain relatively stable for the first quarter of 2008 compared with the first quarter of 2007.

Ericsson shares are expected to open “substantially lower” from its SEK11.48 closing, while the impact on Nokia, which closed at EUR20.45 aren’t as clear, says a Swedbank analyst.

Company Web site: http://www.sonyericsson.com

-By Adam Ewing, Dow Jones Newswires; +46 8 545 130 95; adam.ewing@dowjones.com

(END) Dow Jones Newswires 03-19-08 0359ET Copyright (c) 2008 Dow Jones & Company, Inc.
via CNN

(refiling, changing to ‘late morning’ in first par)
COPENHAGEN, Mar. 19, 2008 (Thomson Financial delivered by Newstex) — Shares were lower late morning, shedding initial gains, with investor sentiment negatively affected by a profit warning from Sony (NYSE:SNE) Ericsson. (NASDAQ:ERICY)
At 11.09 am, the OMX Stockholm index was down 1.11 pct at 298.22, and the OMX Stockholm 30 index shed 1.09 pct to 904.60.
Turnover was 7.57 bln skr.
Ericsson B fell 8.29 pct to 10.51, after jointly owned handset division Sony Ericsson warned that it now expects first quarter pretax profits of 150-200 mln eur and lower sales quarter on quarter.
Analysts had been expecting a pretax profit of 362 mln eur, according to a survey by SME Direkt.
‘This is the first very clear indication that demand in the end market is weakening and that is clearly negative for the sector,’ Thomas Langer, analyst at WestLB said.
Carnegie’s Ericsson analyst Martin Nilsson said: ‘Sony Ericsson accounts for one third of Ericsson’s operating profit, so it’s quite a big hit.’
Trelleborg AB shed 0.23 pct to 108.25. The industrial group said it has acquired US company MacDermid Offset Printing Blankets for 400 mln skr.
Among other heavily traded shares, TeliaSonera AB (PINKSHEETS:TLSNF) was down 0.22 pct at 46.10, Boliden AB (TSX:BLS) fell 2.06 pct to 59.50 and Atlas Copco AB added 0.78 pct to 96.50.
Copyright Thomson Financial News Limited 2008. All rights reserved.
The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News.

via CNN