Will Ericsson Bail out of SonyEricsson?



Well, the results are in and they're looking bleak for SonyEricsson. Despite the fact they've got a couple of the hotest phones around - the T68i and the P800 - they are bleeding cash:

Sony Ericsson posts wide 1Q loss amid drop in sales

Wireless phone maker Sony Ericsson said it still hopes to post a profit for 2003, despite reporting a wide first-quarter loss Thursday amid a sharp drop in sales.

Sony Ericsson lost 104 million euros ($114.1 million) in the three months ending March 31, compared with a slight profit for the same period last year. The joint venture between Ericsson and Sony isn't publicly traded.

Revenue fell 39 percent to 806 million euros ($885 million) from 1.1 billion euros a year ago.

The company said its first-quarter shipments fell by 400,000 phones to 5.4 million, which likely will intensify questions about Ericsson's commitment to the company because Ericsson is wrestling with its own problem: returning to profitability after two years of steep losses.

This could be the final blow to Ericsson before they finally bail out of the handset business altogether. Both parent companies JUST put cash into SonyEricsson a while ago and announced restructuring, but either it didn't help or it's too soon to see the benefits. Regardless, this definitely isn't an industry issue, as Nokia beat expetactions and are predicting strong quarters ahead. Urgh.

SonyEricsson's ship is seriously taking on water. The question is, now that Sony has learned everything it needs to know about the handset market from Ericsson (answer: obviously not a whole hell of a lot) and Ericsson's desperately trying to get back to profitability, will Ericsson bail out and leave Sony to go it alone?

I'd say no - which is easy to say, since any breakup would be years off so you wouldn't remember if I was right or not anyways. ;-) But seriously, if you look at the lineup of phones that SonyEricsson has now and is coming soon, these guys really are starting to get their act in gear. The right technology and designs matching the right consumer needs. I think if they can get the business side of their venture in order, they're going to do well.

Just my hunch. It may just be my growing technolust for the P800 talking...


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