STOCKHOLM (AP) — Mobile phone maker Sony Ericsson on Friday warned that it expects to post a first-quarter pretax loss as it continues to be hurt by falling consumer demand amid the global financial crisis.
In a brief statement, the Sony Corp. and LM Ericsson AB joint venture also said it is taking a hit from distributors and retailers reducing their inventories.
The group predicted a first-quarter loss of between $465 million to $533 million.
Ericsson shares fell nearly 9 percent to $8.64 in Stockholm after the announcement.
Sales are forecast to be weak in the three-month period, it said, and the gross margin, a measure of profitability, is expected to fall both year-on-year and compared with the fourth quarter.
The announcement is yet another sign that the wireless industry is not immune, as many had thought, to the current recession. New Millenium Research Council (NMRC) yesterday released a survey that showed consumers are starting to cut back on cell phone spending, switching to prepaid plans and trimming extras like data and texting as a way to save.
Earlier this year, Gartner reported slumping handset sales for the fourth quarter of 2008 and projected a continued decline in sales for 2009.
Sony Ericsson is due to release its first-quarter results on April 17.