The job cuts will be in addition to the cuts already made. Sony Ericsson had announced a cost-cutting program in July 2008 that mentioned 2,000 job cuts by the end of the first half of 2009, a move expected to bring its work force to around 10,000.
Sony Ericsson, the world's number four mobile phone maker, has suffered massive losses as consumers opted for touch screen models from competitors such as Apple Inc. It reported a pre tax loss of 293 million Euros in the first three months of 2009. The troubled mobile phone maker reported its third straight quarterly loss after it slipped to fourth place in global handset shipments at the end of last year.
The company said it had shipped 14.5 million phones during the first quarter, a decrease of 35 percent compared with the same period last year. The average selling price of its handsets fell to 120 Euros from 121 Euros in the fourth quarter as compared to the previous year
Sales for the quarter were 1.7 billion Euros, a fall of 36 percent from the previous year, attributed to diminishing consumer confidence and de-stocking of retailers and distributors. It is expected that the global handset market shall contract by at least 10 percent in 2009.
Dick Komiyama, president of 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 company maintains that the cuts are due to weak demand amid the recession, but is aiming to return to profitability "as quickly as possible". The job cuts will hit staff worldwide in a new round of restructuring estimated to cost about 200 million Euros.
The company hopes to ride out the current credit crunch by cutting operating costs and working towards a more cost efficient organization that can continue to create innovative products.
"The management intends to pursue an additional cost saving program targeting a further annual operating expense reduction of 400m euros, to be completed by mid-2010," said Komiyama.
Some analysts have criticized Sony Ericsson for focusing on the expensive handsets, thereby failing to meet the tough competition of lower prices in emerging markets like China and India. The average selling price of Sony Ericsson phones was 120 Euros as compared with 65 Euros for devices from Nokia Corp.
Shares in Ericsson rose 2.2 percent to 77.70 kronor (Euro7.11; $9.37) in early morning trading in Stockholm.
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