More High-End Pain
Nokia Corp. (NYSE: NOK) also noted this slowdown in its earnings results last week, but it is in a better position to weather the tough market for smartphones because it has a strong low-end device business in developing markets. India and China account for 75 percent of the Finnish phone maker's sales. (See Nokia: High-End Hurt.)
"Unfortunately, Sony Ericsson has a high exposure to the fashion/mid- to high-end segment (60 percent of phones being branded Walkman or Cybershot), especially in Western Europe," writes Janardan Menon, a Dresdner Kleinwort analyst. "Unlike Nokia, weak trends in Europe were not sufficiently offset by growth elsewhere."
And Nomura Securities analyst Richard Windsor notes: "Sony Ericsson… confirmed our fears that the high-end of the market has been much softer than we were anticipating just a few weeks ago."
— Michelle Donegan, European Editor, Unstrung