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Sony Ericsson to pare CDMA phone production, cut jobs in Germany,

Posted on: Tuesday, 24 June 2003, 06:00 CDT

STOCKHOLM, Sweden (AP) -- Cell phone maker Sony Ericsson said Tuesday it will stop producing CDMA cell phones for the North American market and will cut 500 jobs in research and development departments in Germany and the United States.

The company, a joint venture between Sweden's LM Ericsson and Japan's Sony Corp., said it will shift focus to new development of phones that use GSM, or global system for mobile communications, covering 70 percent of the world's wireless users.

CDMA, or code division multiple access, is the wireless standard used mostly in the United States, Japan, South Korea and China. In the United States, Sony Ericsson has lost market share to Motorola and Samsung.

``Today's announcement ensures the continued growth and development of Sony Ericsson. The actions reflect our strong forward momentum as we intensify our business focus and work to achieve profitability,'' said Katsumi Ihara, president of Sony Ericsson.

London-based Sony Ericsson has steadily lost money since it was established in 2001.

In the first quarter of this year, the joint venture lost 104 million euros ($114.1 million), compared with a slight profit for the same period last year. The company isn't publicly traded.

The company won't stop production of CDMA phones for markets in Japan, where models with built-in cameras have been selling strongly.

The company will also focus on developing development of its GSM/UMTS/EDGE business.

UMTS, or Universal Mobile Telecommunications System, is an advanced form of wireless transmission that some carriers plan to adopt because it would let users send pictures and documents through their mobile phones.

EDGE is akin to 3G, which is expected to provide new capacity and supports faster services.

Because of the shift, Sony Ericsson will close a research and development center in Munich, Germany, and Research Triangle Park, North Carolina, eliminating 500 jobs, or 12{ percent of its work force. The company employs 4,000 workers worldwide.

Sony Ericsson's share of hand set sales has been waning.

In survey of first-quarter 2003 sales of mobile phone, market research firm International Data Corp. found that Sony Ericsson had slipped from the top five, replaced by LG Electronics.

Its worldwide shipment of phones in the first quarter fell by 400,000 phones to 5.4 million.

Nokia remained the top mobile phone vendor, claiming 35.5 percent of global market share, shipping more than 38 million units -- more than double its closest competitor, Motorola Inc.

Motorola had a 15.5 percent share, followed by Samsung Electronics Co. with 12.3 percent and Siemens AG with 7.4 percent. LG Electronics had 5.2 percent. Sony Ericsson had 4.8 percent.

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On the Net:

Sony Ericsson: http://www.SonyEricsson.com

(mpm)

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