Probably because Ericsson has showed a major downward trend with no practical turnaround in sight.  The Gaming division is operating at a loss but that loss has been consistently shrinking meaning they are still in an upward trend (at least until final Q3 numbers are released, preliminary data shows the yen inflation might hinder this).  The gaming division will be kept around basically due to the upward trend and possible profitability next fiscal year.  Sony Ericsson just flat missed the boat in the phone trend (along with most sony divisions with each of their industries).

I mean in the last few years. The PS1 is gone, it's history. The PS2 is declining faster than the PS3 is improving. The PSP is starting what seems like a decline.

Anyway, here are the last few quarters/years for Sony Ericsson:

http://i44.tinypic.com/40oqb.jpg

(they were profitable in FY2005 too)

Now compare that with the multi billion € losses of the recent years at SCE.

But Sony Ericsson being gone doesn't necessarily help the Playstation... If they're both posting losses, both of them have to take measures to be profitable. Sony Ericsson has already said how they plan to be profitable, SCE not so much.

But they haven't been consistely improving (as I recall it, they were profitable in the previous holiday quarter but not in the following ones)... I guess if you look at it on a YoY basis you'd be right, but probably not anymore as soon as they post this holiday quarter's results.

Anyway, I'm not saying the gaming division will be canned. All I'm saying is that Sony Ericsson is not doing worse, so I don't understand why people are ready to burn it at the stake.

The irony is that the Xbox division will be getting cuts while everyone was expecting that to happen to Sony

Holiday quarter for 07 had large PS2 sales numbers and the ps2 is basically dead in sales now, so it would be expected for their to be a loss in holiday 08.  Aside from the stray quarter they are in an upward trend still.  I'm not sure how their staffing structure is but I would suspect they would eventually minimize management roles (combine duties and axe redundent positions like many retail industries do).  Long term trend wise sony Ericsson is doing far worse.  Aside from their partnership with Samsung for some new phones (I'm not even sure if they are still running with this but as of Dec they were) they have nothing that interests anyone in the phone market. 

I'm not disagreeing with what you are saying but this seems to be the likely train of thought for the proposed cut of Sony Ericsson.  I can see both sides though.

SCE probably knows their future and knows well when PS3 hardware will break even. Plus Sony as a whole own the gaming div for winning them the format war.

Things were harder then though but they always had that lose on hardware strategy.

I guess SCE will be here for a while, regardless to the Nintendo or Xbox fanboys' desires.

It seems that MS has been doing cuts as well. "Cry On" was cancelled (a reason I bought my Xbox 360). More money is being funneled into Gears and Halo - two games I could give two cr*ps about.

Microsoft had nothing to do with Cry On.  AQ Interactive was publishing it, and they canceled it.

Pretty much all of the gaming divisions losses in the past few years can be attributed as an investment in future Blu-Ray income. The PS3 carried Blu-Ray to victory, and its also why the PS3 cost $600, instead of $500, when it was released.

The income from that strategic victory by Sony will dwarf the R&D expense of the PS3, by comparison, over the next 15 years, by royalties from BDs alone. SCE is awesome -- they have never, ever, let Sony down in the grand scheme.

You left out an E in the title. SCE may be getting cuts but according to Reeves SCEE will not. That still leaves SCEA, SCEJ, and SCE as a whole on the blocks. Anyway expect drastic cuts/write-offs from all companies. It always happens during economic downturns. Companies use bad times to justify reorgs and writing off bad deals.