Mobile phone maker Sony Ericsson warned on Wednesday first-quarter earnings could fall by more than half, adding to growing gloom in the handset sector and dealing co-parent Ericsson a fresh blow. A global economic slowdown is starting to crimp consumer spending, hurting the whole sector.
Last week, chip maker Texas Instruments cut its first-quarter forecasts, citing weaker demand for chips used in higher-priced 3G phones. "It is natural in consumer electronics that when consumer uncertainty increases, they maybe postpone purchases or buy lower-end models," said Janne Rantanen, analyst at Swedish bank Carnegie.
"The market is proving to be challenging," said Sony Ericsson President Dick Komiyama. Net income before tax at the venture, owned by Ericsson and Sony Corp, is set to be 150 million euros ($237.2 million) to 200 million euros in the first quarter. That compares with 362 million in the year-earlier quarter, although Sony Ericsson said its gross margin would remain the same on the year-ago level, which was 30.3 percent.