Sony Loss Widens to $245 Million

By LOUISE NORDSTROM

posted: 41 DAYS AGO

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STOCKHOLM -Mobile phone maker Sony Ericsson said Friday its losses widened to euro164 million ($245 million) on sagging sales in the third quarter, and announced new financing from external investors.

The LM Ericsson and Sony Corp. joint venture said losses in the same period a year ago came to euro25 million.

Sales in the quarter fell more than 40 percent to euro1.6 billion, compared with euro2.8 billion in the same period in 2008. Units shipped in the July-September period amounted to 14.1 million, up 2 percent on the quarter, but down 45 percent on the year.

Sony Ericsson said it had strengthened its balance sheet by securing euro455 million ($676 million) in external financing facilities, primarily from parent companies Sony and Ericsson.

In April, Sony Ericsson announced it would slash 2,000 jobs, on top of 2,000 jobs cut last year, to lower costs. In total, it aims to cut operating costs by euro880 million, with full effect of the measures expected in the second half of next year.

In Friday's statement, it said the charges related to the cutbacks would "be well within" its euro500 million estimate.

In its outlook for the future, it said it expects the global handset market to shrink by around 10 percent from about 1.19 billion units in 2008.

Its market share came to around 5 percent in the third quarter, it said.

Market leader Nokia Corp. on Thursday said it maintained its 38 percent market share in the third quarter, despite a 20 percent drop in net sales.

Outgoing Sony Ericsson President Dick Komiyama said the company had worked at strengthening its image during the quarter. "Having refreshed our brand we are now better positioned to support the launch of new products," he said.

Greger Johansson, an analyst at research firm Redeye, said the financing issue was the single most important bit of news in the report.

"This will give them some working peace for the next year," he said, noting it is likely to push up Ericsson shares somewhat during the day.

Although sales may have been "marginally lower" than hoped, the income line still beat analyst estimates by a bit, he said.

Ericsson shares rose 2.25 percent to 73.40 kronor ($10.61) in midday trading on the Stockholm stock exchange.

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2009-10-16 06:29:40