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Sony Ericsson Posts $245 Million Loss

Sales are dropping as consumers hold off upgrading their handsets, and Sony Ericsson expects 2009 to be a tough year.
Sony Ericsson continues to struggle as the global economic slowdown is hurting its sales in mature markets.

The company posted a loss of about $245 million for the fourth quarter of 2008, a dramatic drop from the $495 million profit for the same period last year. The loss comes despite the release of the high-profile Xperia X1 and an 8.1-megapixel camera phone.

Sony Ericsson shipped 24.2 million phones for the quarter, a 21% drop from a year ago. The company is being especially hard hit by the faltering global economy, as many customers are holding off upgrading their handsets to save money. Unlike rivals Nokia, Samsung, and Motorola, Sony Ericsson does not have a large portfolio of entry-level phones to sell in emerging markets like China.

"In economic terms, 2008 has been a tumultuous year with world markets experiencing a serious downturn," Sony Ericsson president Dick Komiyama said in a statement. "We foresee a continued deterioration in the marketplace in 2009, particularly in the first half."

With nearly every analyst and mobile phone company expecting a contraction in the cell phone market in 2009, Sony Ericsson said it's undergoing massive restructuring in order to achieve about $398 million in cost savings. The company has already announced 2,000 layoffs, and Komiyama said that number may grow.

While the situation appears bleak for the short term, the company is working on some long-range projects that may help it garner market share. The company recently joined the Open Handset Alliance, and an Android-powered smartphone is expected in the second half of this year. Sony Ericsson is also a founding member of the Symbian Foundation, and it's expected to have an open source Symbian handset ready in 2010.