Ericsson profits fall on excess inventories

Mobile phone maker Sony Ericsson reported Friday that its pre-tax profits fell by 28 percent and that sales had dropped by 4 percent in the first quarter, and that sales, profits, and prices had all come in well below expectations.

Reasons the company gave for this drop in earnings included a consumer preference for cheaper phones and excess inventories built up before Christmas.

Also blamed was the tendency for fluctuations in a market in which the product has a short life and few new products launched by the company in the first quarter, which meant prices were a bit lower.

Sony Ericsson also reasoned that it was harder this year than last for it to differentiate itself from its competitors in customers’ eyes. Last year most of its profits came from its early entry into the production of camera phones.

This year, however, cameras are a standard feature on most mid and upper tier mobile phones, so the company had little justification for pricing its phones higher than others on the market.

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