Sony Ericsson CEO Preparing For Tough '09

The chief executive of Sony Ericsson, a venture of Sony Corp and Ericsson, sees a tough cell phone market through the end of 2009, with unit sales down by about 5-6% as consumer demand slows in the weak global economy.

But Hideki Komiyama, who plans to release the company's official 2009 estimates when it reports earnings later this month, said he believes Sony Ericsson "probably held" its 8% global market share in the fourth quarter.

"Others are falling apart but we are holding up," he said referring to rivals such as Motorola Inc and LG Electronics in an interview with Reuters at the Consumer Electronics Show in Las Vegas.

However, even though Sony Ericsson overtook Motorola as the world's No. 3 mobile phone maker in the third quarter, he noted that Motorola, LG and Sony Ericsson's shipment volumes were not that different and put the change down to weaker performances by rivals than any big improvements at Sony Ericsson.

"We just happened to be number three in the third quarter. I'd like to be No. 3 by ourselves by 2011," without depending on rivals faltering, he said.

Komiyama said it was difficult to forecast an outlook for the market but noted it was clear it would be a tough year.

"Right now it is not clear how the industry will be shaping up in 2009 or 2010. We know it is challenging," he said, adding that the company was "preparing accordingly."

For example, it will look very carefully at its product portfolio and focus on more expensive, higher-margin products rather than cheaper, less profitable devices.

"We have to start analyzing products where we generate higher margins and eliminate the models where we have lower margins," even if it means producing less products than originally planned, he said.

But in some markets the company still needs a mix of high-end and cheaper phones, he added.

Sony Ericsson has typically targeted profit margins in the low-double-digit percentage range, though it has failed to achieve those levels since 2007.

The company's key devices including its popular Walkman music phones are facing stiff competition from rivals such as Apple Inc's iPhone, particularly in the United States.

Even as the market shrinks Komiyama said it is important to keep the percentage of revenue it invests in research and development steady in order to be ready for a recovery.

He said the company was preparing for exciting new smartphone devices for 2010 but would not give any details.

"At this moment we're under heavy rain. You have to look for shelter. But when you're in the shelter you start preparing," for a recovery, he said.

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