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Sony Ericsson Gets Knocked Down (and takes everyone else down too)

March 19, 2008 in Wireless Industry News

A couple of days ago, Texas Instruments warned investors that one of its customers was cutting back on its orders. While there was some speculation as to whether cell phone sales were starting to slump, most agreed that Nokia was probably just shifting orders to several new chip suppliers.

Sony Ericsson Drops The Ball

Sony Ericsson Drops the Ball

And then the bomb dropped: Sony Ericsson announced that it will ship out 22 million phones in the first quarter. That’s a big number, but the old number was 28 million phones. Yep, that’s 6 million phones that won’t be shipping and a lot of money that won’t be made.

According to Sony Ericsson, the slowing growth is occurring in the mid-to-high end phone market. That’s bad news for the company, whose product lineup is right smack in the middle of that market. While Sony Ericsson’s phones sell for an average of $189 each, Nokia’s is $129, mostly due to the fact that Nokia has gone nuts expanding into the so-called “emerging markets.” Lots of cheaper phones = lower average selling price but more sales.

Shares of Ericsson’s stock fell 10%, but the bad news spread to other handset makers:

Nokia: -10%
Motorola: -4.21%,
Research in Motion: -3.7%
Apple: -2.37%

It was a rough day in the wireless handset market.

Sony Ericsson Sees Slowing Mobile Phone Sales – Investor’s Business Daily

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