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20 March 2009 By Una Galani Follow @ugalani

A profit warning from the handset maker has got what was expected to be a bad year for the industry off to an even worse start. Parent Ericsson already thinks the joint venture is a drag on its networks business. The latest setback will spur thinking that it s time to get out.

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Sony Ericsson warned on March 19 that it expected to make a pretax loss of E340mE390m in the first quarter, citing retail destocking and poor consumer demand.

The mobile handset maker plans to ship approximately 14m phones in the first three months of 2009, with an estimated average selling price of E120. Sony Ericsson expects its gross margin in the first quarter of 2009 to be lower than in the previous year and the previous quarter.

In the fourth quarter of 2008, Sony Ericsson posted a pretax loss of E261m and forecast demand would shrink at least 5% in 2009. At the time, the world's fourth largest handset maker also emphasised that preserving profitability was more important than keeping market share.

Sony Ericsson is a 5050 joint venture formed in 2001 between Sony, the Japanese consumer electronics group, and Swedish telecom network equipment maker Ericsson.

Context News

Sony Ericsson warned on March 19 that it expected to make a pretax loss of E340mE390m in the first quarter, citing retail destocking and poor consumer demand.

Sony Ericsson is a 5050 joint venture formed in 2001 between Sony, the Japanese consumer electronics group, and Swedish telecom network equipment maker Ericsson.

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