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Sony Ericsson warns of deepening losses

Flagging consumer demand is putting a hurt on the maker of mobile phones. An analyst says this could be a deciding year for the company.

The Sony Ericsson C905. Sony Ericsson

Sony Ericsson has warned of worsening losses in its upcoming quarterly financial results, blaming weak consumer demand for a drop in sales.

In a statement released by the handset maker Friday, Sony Ericsson said its results for the first quarter of 2009 would probably reflect losses of 340 million to 390 million euros ($460 million to $528 million). Those results will come out on April 17. In the previous quarter, the company lost 187 million euros.

Sony Ericsson estimated it would ship around 14 million handsets during the quarter, with an average selling price of 120 euros.

Gartner analyst Carolina Milanesi said in a separate statement that the global handset market "continues to be challenging," despite some signs of quarter-on-quarter improvement in China and India.

"Imaging and music are now features that most vendors have in their portfolio and this is making it more difficult for Sony Ericsson's products to stand out," Milanesi said. "Increased competition in Western Europe coupled with a slower market and the delay in adopting touchscreen devices are heavily impacting Sony Ericsson's performance."

In January, Milanesi warned that 2009 would be a deciding year for Sony Ericsson, after the manufacturer announced its losses for the fourth quarter of 2008. A week later, Ericsson--one of the joint venture's two parent companies--cited a "dramatic drop in the contribution" from Sony Ericsson as one reason why its profits for that quarter showed a 31 percent year-on-year fall.

David Meyer of ZDNet UK reported from London.