Sony Ericsson said today it was hit by a tough market and few new product launches in the first quarter that took earnings well below market expectations.
The world's number six mobile phone maker, owned by Ericsson and Sony, said it had a stronger portfolio for the rest of the year and foresaw good growth potential in the market.
It reported a pretax profit of €70 million, compared with the average forecast of 11 analysts of €118.5 million.
"The western European market declined slightly and witnessed a shift to pre-paid products, while general inventory build-up in the sales channels during Q4 spilling over into the first quarter created a more competitive market environment than a year ago," it said in a statement.
"Sony Ericsson's decrease in average selling price was partly due to the general market conditions outlined above, but also because the product line-up was mature and few new products were launched during the period," it added.
It said it had managed to maintain gross margins. Sales came to €1.29 billion versus a forecast of €1.66 billion and last year's first-quarter total of €1.34 billion.