Mobile phone maker Sony Ericsson warned Friday that it will just break even in the second quarter as worsening market conditions cut into sales. Shares of the Stockholm-based company tumbled nearly 10 percent to 60 kronor ($10.02). Ericsson cited “moderating demand” for mid-to-high end mobile phones, as well as delays in the quarter in the shipping of new products.
The company said it would break even before taxes.
It was Sony Ericsson’s second profit warning this year. In March it warned of similar problems, which led the company reporting a 48-percent drop in first-quarter net profits.
Sony Ericsson reports second-quarter results on July 18.
The news comes on the heels of disappointing results from Treo smart phone maker Palm Inc., which Thursday reported a fiscal fourth-quarter loss and lower revenue which missed Wall Street expectations. The Sunnyvale, Calif.-based company said sales of cheaper Centro phones are strong, but higher-margin Treo sales have slowed.
Blackberry maker Research In Motion Ltd. also this week reported quarterly profit which missed analysts expectations.
When the company released first-quarter results, it said it expected the global handset market for this year to grow at a pace of about 10 percent, from more than 1.1 billion units in 2007.
Sony Insider expects to see even worse profits for Sony Ericsson once the $199 3G iPhone debuts in mid-July. Sony Ericsson will face the same problem that Sony Electronics faced with its audio division in the early ’00’s; product lines were spread too thin, lack of innovation and an easy defeat at the hands of Apple.
