Sony Ericsson today posted its Q1 2009 results and they make for grim reading. Sony Ericsson lost EUR 358 million in the first 3 months of 2009 and shipped 14.5 million devices, a 35% year on year decline, and gross margin dropped from 29% to 8%. The numbers were not unexpected and Sony Ericsson is moving to restructure the business, but it will take time.

The company announced that it would be cutting an additional 2,000 jobs; this means Sony Ericsson plans to cut its work force by a third from 12,000 to 8,000 by next summer.

Dick Komiyama, President, Sony Ericsson said:

"As expected, the first quarter of this year has been extremely challenging for Sony Ericsson due to continued weak global demand.  We are aligning our business to the new market reality with the aim of bringing the company back to profitability as quickly as possible. The management intends to pursue an additional cost saving program targeting a further annual operating expense reduction of Euro 400 million, to be completed by mid-2010."

Sony Ericsson is accelerating its cost cutting program and is reflected in the announcement of additional job losses.

Sony Ericsson high end portfolio currently lacks depth and punch. It has been affected by the fall in consumer spending as a result of the economic environment. However its brand and core multimedia values, as set out in its 'Entertainment Unlimited' strategy, remain a significant asset.

While recently announced devices, including the Symbian Foundation-based Idou handset, will go some way to offsetting product portfolio problems, it (the Idou) is not expected to arrive until late in the year or early 2010. Other products are in the pipeline, but conditions are likely to remain difficult for Sony Ericsson throughout 2009.