Sony Ericsson May Need To Raise Cash

As the recession saps demand for its phones, the company says it's looking to raise about $135.5 million by next March.

Marin Perez, Contributor

May 21, 2009

2 Min Read

Sony Ericsson W960
(click image for larger view)
Sony Ericsson W960

Struggling Sony Ericsson said this week it's looking to raise at least $135.5 million in new funds by next March.

The company, which is a joint venture between Sony and Ericsson, did not say how the money will be raised, but the news comes a week after Sony CFO Nobuyuki Oneda said the phone manufacturer would need to raise some cash. The financial difficulties have led to rumors and speculation that the joint venture would break up, a claim that has been denied by both sides.

The mobile industry as a whole has been hit by the global economic recession, which is sapping consumer demand for new phones. Sony Ericsson has been particularly hard hit, and it posted a $386 million loss for the first quarter as sales dropped 36% from the previous year.

Part of the problem is that the company specializes in midtier phones like its Walkman line, and this segment of the market has seen the sharpest decline. Entry-level phones continue to sell well in emerging markets like India and China, and smartphones like the iPhone 3G and BlackBerry Storm are still seeing strong growth despite the overall decline in phone shipments.

Sony Ericsson said it would adopt multiple strategies in order to remain competitive with the likes of Nokia, Samsung, and LG Electronics. The company will be pushing phones with high-quality cameras like the C905 in order to enable consumers to snap and share photos on the go. Additionally, the company is looking to emphasize the multimedia aspects of its devices by launching a mobile movie service and software that makes it easier to transfer audio and video files to a handset.

Most companies are just starting the hard work of mobilizing workforces by bringing the software they use to smartphones. InformationWeek analyzed this issue in an independent report, and it can be downloaded here (registration required).

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