Sony Ericsson cuts 17 per cent of staff

Sony Ericsson has announced 2,000 job cuts as part of a cost reduction measure.

The company confirmed speculation that that cuts would be made following poor quarterly results.

The joint venture between Japan's Sony and Sweden's Ericsson has struggled with tough competition in the mobile phone market.

The company reported profits of only US$9.5m in the second quarter, compared to US$347.6m in the same period one year earlier.

Quarterly sales were down more than nine per cent to US$4.45bn. The company warned investors last month that results would be poorer than expected.

Observers attribute Sony Ericsson's woes to its greater emphasis on high-end fully-featured phones, compared to competitors' strengths at the low end of the market.

Rivals such as Nokia, the world's largest mobile phone maker, and South Korea's LG have done well with low-priced entry-level models in emerging markets such as China.

Sony Ericsson has vowed to focus more attention on emerging markets, and predicts that this will help lead to a rise in unit sales of 10 per cent this year.

The company hopes to realise more than US$470m in cost cuts each year following the layoffs and other belt-tightening exercises.

"We are aligning our operations and resources worldwide to meet an increasingly competitive business environment and to help restore our capability for profitable growth," said Dick Komiyama, chief executive at Sony Ericsson.