Mobile phone maker Sony Ericsson announced last Friday it was cutting 2,000 jobs worldwide after reporting an operating loss in the second quarter due to difficult market conditions and the global economic slowdown.

"We're going to cut 2,000 jobs within a year all over the world, out of 12,000 employees," spokesman Susanne Andersson said.

Sony Ericsson posted an operating loss of two million euros (S$4.3 million) in the second quarter, compared to a profit of 315million euros in the same period of last year.

Net profit plunged 97 per cent to six million euros from 220 million euros a year earlier, while sales fell 9.4 per cent to 2.82 billion euros.

In a statement presenting its second-quarter earnings, the group announced a restructuring programme aimed at cutting operating costs.

"Our target is to achieve a reduction in operating expenses of 300 million euros annually, with the full effect expected to appear within a year," Sony Ericsson chief executive Dick Komiyama said.

"The measures we are taking are aimed at becoming a faster, more agile and more cost-efficient organisation that can continue to create innovative products that excite consumers."

The group has been trying to develop its business on fast-growing emerging markets in order to reduce dependence on its traditional, near-saturation European outlets.

As a result, it has sold more low-end phones, where prices are lower and the competition is tougher than in the high-end segment, the company said.

But Sony Ericsson has been hit by a double whammy: It is suffering from the economic slowdown in Europe and, at the same time, it lacks the products and volumes necessary to make a splash in emerging markets such as China and India.

With its late entry on emerging markets, Sony Ericsson has been forced to reduce its average selling price for handsets, which fell to 116 euros from 125 euros in the second quarter of last year, weighing down profits.

At the end of last month, Sony Ericsson had 8 per cent of the mobile phone market, compared to Nokia's 40 per cent.

Source:AFP