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Announcement sends mobile sector stocks plummeting

The mobile phone market is seeing some of the poorest sales in recent history with demand for products dropping in many segments of the mobile phone industry. The only segment of the mobile phone industry that is predicted to show strong growth this year is the high-end smartphone market.

The fourth largest mobile phone maker in the world -- Sony Ericsson -- has announced that it will see a massive loss for the quarter with barely half of the handsets sold this quarter as it was able to move in the quarter before.

The announcement by Sony Ericsson sent shares across the wireless sector into a downward spiral reports Reuters. Sony Ericsson expects to sell only 14 million phones in the quarter spanning January to March and cites weak demand and retailers cutting inventories as reasons for the massive decline.

Jari Honko from eQ Bank told Reuters, "Investors are questioning the whole market now, even though I think the issue for Sony Ericsson is more company specific."

Sony Ericcson wasn't alone in announcing declines in sales and shipments -- Palm announced that it was going to see a larger loss than originally reported over the December to February quarter. Revenues for the quarter declined 70% from one year ago according to Palm. Analyst Carolina Milanesi from Gartner said, "The market, overall, continues to be very challenging." Sony Ericsson announced in January that it would cut 5,000 jobs.

The massive losses from mobile phone manufacturers spilled over into fears for the chipmakers building the processors for the mobile phone market. Infineon shares dropped 6.6% and STMicro dropped 5% after the announcements by Sony Ericsson and Palm.

Sony Ericsson is expected to announce a pretax loss of $459 million to $526 million for the quarter. Analyst Greger Johansson from Redeye noted, "It's a real catastrophe. Those are very big losses and they are probably losing a lot of market share. It's obvious that the volumes are much lower than the market had thought. And first and foremost, the losses are much, much bigger."

Sony Ericsson is biggest in the mid-range mobile phone market with integrated cameras. This is one of the segments hardest hit with the current global economy according to Reuters. Analysts expect sales of high-end smartphones to continue to rise as other segments in the category fall. The predicted growth rate for high-end devices is 10% to 20% in 2009.

Qualcomm's Jing Wang told Reuters, "Consumer demand for higher-end smartphones remains strong as the demand for wireless Internet, multimedia, and value-added services continues to grow." He continued saying, "While inventories have contracted, global 3G adoption is continuing to grow as subscribers migrate from second-generation to third-generation networks and manufacturers are shipping more 3G devices this year than last year."

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Wake me when there's news
By chmilz on 3/23/2009 1:16:37 PM , Rating: 2
Sony divisions hemorrhaging money was old news 10 years ago, let alone today.

RE: Wake me when there's news
By The0ne on 3/23/2009 1:32:57 PM , Rating: 3
Yea, Sony's been suffering for quite a few years now. Our current world situation doesn't help it at all.

RE: Wake me when there's news
By nixoofta on 3/23/2009 1:51:09 PM , Rating: 2
I'd be interested to find out who sold off all their shares before they went "Google Street View" with this.

RE: Wake me when there's news
By spread on 3/23/2009 11:18:47 PM , Rating: 2
Sony needs more attitude. You can't just buy a Sony product, you're chosen.

Yeah, that's a good strategy.

RE: Wake me when there's news
By spread on 3/23/2009 11:19:16 PM , Rating: 2

(forgot that)

RE: Wake me when there's news
By elpigo on 3/25/2009 3:20:08 AM , Rating: 2
To the author of the article: Please at least get your facts right. You state that Sony Ericsson will shed 5,000 jobs and point to an article stating that - however, the article you link to is about the 5,000 job cuts at Ericsson, NOT Sony Ericsson. Ericsson is one of the "parents" in the Sony Ericsson JV and so owns 50% of the JV. Some research would be good on your part.

RE: Wake me when there's news
By xti on 3/25/2009 12:23:40 PM , Rating: 2
dont forget to give him a wedgie.

RE: Wake me when there's news
By chagrinnin on 4/4/2009 4:38:16 PM , Rating: 2
...and some noogies,...for good measure.

By bbomb on 3/23/2009 1:52:36 PM , Rating: 3
the crappy phones they keep rolling out its no wonder. My brother-in-law had the W800i. It was his most favorite phone by a long shot. It is a phone loved by tons of its users. So what did Sony do? They got rid of it a replaced it with a crappy cheap uninspiring slider. What he misses the most about the phone though is the flashlight that was on it.

If they continue down this path, they have no future at all.

RE: With
By Aloonatic on 3/24/2009 5:26:52 AM , Rating: 2
You've hit the nail on the head. I had a w800i and loved it, replaced it with a k800i which was even better (for me) as I used the camera a lot more than the MP3 (player bass-boost and better headphones with w models) but ever since then they have tinkered with a winning formula and somehow managed to make things worse.

They can't even make a phone with buttons that just work properly FGS or at the very least feel good to use. My girlfriend has a c902 and it's a nightmare just to use it as a phone and why on earth did they get rid of the xenon flash? To make it slim so that it is too slim to hold comfortably? They have at least realised their mistake in that regard but it's all too little too late.

The mobile/cell phone market seems to be diverging with different segments becoming quite distinct. Sony competed well when the camera/MP3/phone was what most people wanted but now the either want a large screen smart phone that does everything a-la iPhone or a small phone that simply works as a phone, with perhaps a little niche for the camera phone that will always be popular.

Sony is no-where in most of those markets and their designs are uninspiring. I used to be a big fan but I'm quite happy with Nokia n95. They did a great job when Nokia went through it's wobble a few years ago but Sony just don't seem to be able to move on and keep up any more now that Nokia is relatively back on track and iPhones/Blackberries have entered the mass market fray.

iPhone Competition?
By ltcommanderdata on 3/23/2009 2:18:48 PM , Rating: 2
"Analysts expect sales of high-end smartphones to continue to rise as other segments in the category fall."

In other words, get out your iPhone-clones/iPhone-killers quick.

RE: iPhone Competition?
By michael2k on 3/23/2009 5:08:44 PM , Rating: 3
Wasn't that apparent a year ago though?

I mean the iPhone is effectively 2 years old now (since it was announced over two years ago now.

By Odysseus145 on 3/23/2009 2:32:09 PM , Rating: 2
You won't see me shedding any tears. My w580i has been nothing but a pain in the...

My old Motorola v557 which was much better

Before you know it...
By Beenthere on 3/23/09, Rating: 0
"I'd be pissed too, but you didn't have to go all Minority Report on his ass!" -- Jon Stewart on police raiding Gizmodo editor Jason Chen's home
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