Sony Ericsson head looks to sharpen its portfolio

Sony Ericsson is slashing up to 17 per cent of its workforce, as the handset manufacturer announced disappointing second-quarter results.

The company - a joint venture between Ericsson of Sweden and Japan's Sony - reported a slide in second-quarter pre-tax profits to €8m ($12.7m), down from €327m in the same quarter last year and €193m in the first quarter of 2008.

Dick Komiyama, president, said the company had too many similar products and needed to "sharpen its portfolio".

But with falling sales in Asia - the one area of global growth in handset sales - and a gloomy economic picture in Europe, he admitted that the third quarter would "not drastically improve. But there's always Christmas".

Mr Komiyama emphasised the company would not be copying Nokia's approach. "We will define our own strategy," he said. But he admitted that "there is a lot of work to be done".

A new product launch is planned for Tuesday. According to a spokesperson, it "will have something to do with music", probably as part of the Walkman range. Further details were not available.

Carolina Milanesi, a Gartner analyst, thought that there was "a tone of defeat" coming from the company about the rest of 2008.

"Talk of taking it day by day is not enough. [Sony] Ericsson need to refresh their products, but they must make sure that they don't damage their brand."

The results were in line with a profit warning

on June 27, when the company said it would only break even because of disappointing European handset sales.

Sony Ericsson sold 24.4m units in the second quarter of 2008, down 500,000 from the same quarter last year. The average selling price dropped 7 per cent to €116.

However, the company forecast growth in the global handset market of about 10 per cent, with demand coming from emerging markets.

Sony Ericsson's focus on high-end phones has left its handset sales exposed to a global slowdown, in contrast to Nokia, whose diversification into emerging markets and lower-end phones has helped it increase market share and lift sales.

Shares in Ericsson closed up 3.6 per cent at SKr72.30.

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