Sony Ericsson's Cuts Spark Phone Rumors

Sony Ericsson's recent job reductions have sparked rumors that the troubled handset maker may be forced to wind down production of both high- and low-end devices as major losses loom.

Sony Ericsson recently reiterated its commitment to achieve 300 million euros ($414 million) in cost savings over the next year, which includes a total head-count reduction of 2,000 employees and consultants worldwide. This announcement has spread fear that the handset maker may abandon both its high-end smartphone and low-end cell phone business, severely shrinking its portfolio.

Nearly three months ago, the Stockholm-based joint venture between Sony (SNE Quote) and Ericsson (ERIC Quote) said second-quarter income plummeted 97% while the company's operating margins dove to zero, generating concern over Sony Ericsson's ability to compete with rival handset makers such as Motorola (MOT Quote) and Nokia (NOK Quote). ...