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RealTime IT News

Sony Ericsson Shake-Up Aims for Trendier Phones

Sony Ericsson on Monday entrusted the head of Ericsson's U.S. technology division with the task of leading the struggling cell phone maker back to profit and reversing a sharp decline in market share.

The 50-50 venture said it had named Bert Nordberg as chief executive to replace Dick Komiyama, who retires at the end of the year.

Sony Ericsson has reported steep losses in past quarters and seen its market share slip to below 5 percent, sparking market speculation of a possible breakup.

"I would go for increased market share and restoring profitability," Nordberg told Reuters when asked where he hoped to see the company in one to two years. He said he would pursue ongoing restructuring and step up efforts to develop "smash-hit" products.

Nordberg, 53, currently executive vice president at Ericsson and head of the firm's Silicon Valley business, said he was extremely confident in the support from both parent companies and that turning to profit "can't be too far away."

The firm also said Sony CEO Howard Stringer would become new board chairman on Oct. 15, replacing Ericsson head Carl-Henric Svanberg, who will become chairman of BP in January.

"The management changes seem to signal that Sony and Ericsson are prepared to continue working together. That will be reassuring news for Sony Ericsson's staff and customers," said Neil Mawston from Strategy Analytics.

Of the top five cell phone vendors, Sony Ericsson saw the sharpest drop in sales from the first quarter. The firm has missed such mobile phone trends as full keyboards, Internet browsing and navigation, and research firm Gartner said last week that Sony Ericsson's market share fell to just 4.7 percent globally.

"Big decisions to make"

"Nordberg has some big decisions to make from day one," said Ben Wood, head of research at CCS Insight.

"Sony Ericsson needs to streamline its mobile software strategy and further reduce its dependence on mid-tier feature phones while working to restore profitability in the toughest economic climate the mobile phone industry has ever seen."

Sony Ericsson is known for its phones focusing on music and imaging, but so far it has lacked a strong offering of smartphones.

Nordberg said he would look for a strategic revamp of the firm's product portfolio.

"In this industry you need smash-hit products," he said.

Nordberg has been with Ericsson since 1996, prior to which he worked with companies including Data General and Digital Equipment Corp.

In July, Sony Ericsson posted a pretax loss of $400 million, and said the rest of the year would be difficult, with the overall market to shrink at least 10 percent.

"I think it is an effect of them needing a bit of a fresh start, some new blood. In addition to the fact that Sony Ericsson has not performed particularly well during the last year and a half," said Greger Johansson from Redeye.