Sony Ericsson braces investors for a pitfall

Handset manufacturer Sony Ericsson will soon be publishing its quarterly earnings, and this week put out a pre-emptive warning that the struggling economy has had a negative impact on sales.

The company says the mid-range and high-end handset market especially suffered in the quarter due to the economic downturn, but anticipates its growth for the three-month period to be about equal with the same quarter last year.

In the mid- to high-end replacement sector of the European market is where Sony Ericsson has had stronger-than-average market share, according to Sony Ericsson president Dick Komiyama. The joint company has sought to diversify its income, to cull revenue from other markets.

Sony Ericsson's warning today caused speculation about the overall softening of the mobile phone market, which research firm Gartner recently said would actually resist the effects of the economic downturn.

That company's study showed a 16% overall growth of the cellular handset market in 2007 due to increased penetration into emerging markets. It predicted that 2008 would see a slowdown in growth in saturated markets -- such as the EU and North America -- and continue to see growth in emerging markets such as India and China.

If Sony Ericsson is seeing weakened sales in its Western markets, the company has a promising future in markets like China's, where it signed a billion dollar deal last year to help build China Mobile's GSM network.