MUMBAI: Sony Ericsson has forecast that the global handset market for 2009 will contract at least 10 per cent from around 1,190 million units in 2008.

The global handset major, which shipped 14.5 million units in the quarter just ended, a decrease of 35 per cent compared to the same period last year, says the shipment was in line with its interim announcement of approximately 14 million units. Sales for the quarter were Euro 1,736 million, a decrease of 36 per cent from a year ago  Sales decreased primarily as a result of continued weak consumer confidence and de-stocking in the retail and distribution channels, says the company  

Gross margin declined both year-on-year and sequentially, reflecting a change in the product mix, material write-offs, and exchange rate volatility.

Income before taxes for the quarter excluding restructuring charges was a loss of Euro 358 million, within the range announced on March 20, 2009 (loss of Euro 340 - 390 million).

Says Sony Ericsson president Dick Komiyama, As expected, the first quarter of this year has been extremely challenging for Sony Ericsson due to continued weak global demand  We are aligning our business to the new market reality with the aim of bringing the company back to profitability as quickly as possible. The management intends to pursue an additional cost saving program targeting a further annual operating expense reduction of Euro 400 million, to be completed by mid-2010....

The company's initial cost saving program targeting annual operating expense reductions of Euro 300 million by the end of the first half of 2009, including a workforce reduction of 2,000 headcount, has now been completed. A total of Euro 187 million restructuring charges have been recorded compared to the initial estimated costs of Euro 300 million.

In January 2009 an additional cost saving program was initiated to target annual operating expense reductions of Euro 180 million by the end of 2009  The cost of this program will be covered by the initial Euro 300 million restructuring costs announced in July 2008.

The additional cost saving program announced today will include a further reduction in the global workforce of approximately 2,000 people  It is estimated that new restructuring charges of Euro 200 million will be needed to complete this program.

Market share in the first quarter decreased and is now estimated to be around six per cent, down two percentage points sequentially.

At the Mobile World Congress in February 2009, Sony Ericsson announced a new consumer proposition, called â€?Entertainment Unlimited' (EU), to build on Sony Ericsson's leadership in music, imaging, gaming, content services, and applications to deliver unlimited opportunities for consumers  The company also announced the first Entertainment Unlimited phone with the concept name â€?Idou' to be launched in the second half of 2009. The next EU announcement will take place on 28 May.