Sony Ericsson Struggles to Make a Profit; Is WTA Sponsorship Doubtful?

Bob Larson's Tennis News
October 19, 2009

Sony Ericsson, one of the largest mobile phone companies in the world, and global title sponsor for the WTA Tour, hasn't made a profit since the second quarter of 2008.

With Sony Ericsson's sponsorship contract with the WTA set to expire on December 31, 2010, the WTA could face a huge revenue loss if business forces the company to drop its sponsorship. With challenging market conditions and ongoing competition from BlackBerry and Apple's iPhone, Sony Ericsson continues its struggle to get in the black.

Despite the grim numbers, the WTA maintains a positive outlook. “Sony Ericsson has been a tremendous partner for the Tour, and women's tennis has delivered very strong return on investment for Sony Ericsson,” says Andrew Walker, Senior Vice President for Global Marketing & Communications for the WTA Tour. “We are in discussions regarding a continuation of their sponsorship of the WTA Tour, and our focus is on renewal of Sony Ericsson.”

In January 2005, Sony Ericsson inked a six-year sponsorship deal with the WTA for an unprecedented $88 million dollars, to become the Tour’s global title sponsor. Since then, Sony Ericsson has also become an event sponsor for WTA Tour events, including the Sony Ericsson Open in Miami, and the season-ending Sony Ericsson Championships in Doha, Qatar. In 2008, Maria Sharapova became the company’s global brand ambassador. Of course, all of this happened before the global economic downturn.

On the plus side, business at Sony Ericsson is beginning to show signs of recovery, after reporting its 2009 third quarter earnings last week. The company’s net loss was 164 million Euros, a significant improvement from the 213 million euro loss in the second quarter.

Since 2008, Sony Ericsson has continued to cut operating expenses, which has shown improvement in the company’s bottom line. It is worth noting that Sony Ericsson is also under new leadership. As of last week, Bert Nordberg became the new president of Sony Ericsson. “My principal aim is to turn around the company and to return to profitability as soon as possible,” says Nordberg. He also believes the recovery will come in the form of new products that are in the pipeline for the fourth quarter of 2009, which include the new multimedia smartphones, Aino and Satio.

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