Sony Ericsson begins 2,000 job cuts

By Suzanne Deffree, Managing Editor, News -- 9/30/2008

Sony Ericsson has begun a worldwide reorganization and headcount reduction that will see around 2,000 of its jobs cut over the next 12 months.

The action is part of an effort by the handset maker to save $422 million (300 million Euro) over the time period and was first tipped during the company's Q2 announcement on July 18.

While Sony Ericsson withheld details on which sites and functions would be affected by the layoffs, several reports this morning state that the London-based company has begun by cutting 450 jobs from its Research Triangle Park, NC, location, the headquarters of the company’s North American operations. Sony Ericsson did not return calls from Electronic News for comment.

Sony Ericsson has operations in more than 80 countries including manufacturing in China and R&D sites in China, Europe, India, Japan, and North America. Until the cuts began, Sony Ericsson employed approximately 750 people in Research Triangle Park.

"Sony Ericsson recognizes that market conditions have changed very rapidly and action must be taken to ensure that it can remain competitive in the dynamic and fast-paced telecommunications industry. Today the company confirms that it is beginning to implement a plan to align its operations and resources worldwide to meet an increasingly competitive business environment and to help restore its capability for profitable growth," the company said in a statement made Monday.

Indeed, the company reported in its Q2 statement that income fell from $310 million (220 million Euro) in Q2 2007 to less than $8.5 million (6 million Euro) in the June quarter as handset market ASPs (average selling prices) continued to shrink.

Sony Ericsson said more information on its reorganization will be shared when it releases its Q3 financial results on October 17.

Sony Ericsson is far from alone in its cost-cutting measures. Keithley last week announced a 5% workforce reduction, and in the prior week Nvidia, Lattice, and Hewlett-Packard all announced layoffs.

© 2009, Reed Business Information, a division of Reed Elsevier Inc. All Rights Reserved.