Bang & Olufsen has been hard hit by the economic downturn as it seems even the very rich are tightening their purse strings.

The company has, as a result, decided to save some cash.

It is going to stop making the mobile phones, DVD players and recorders and stick to "core products" such as sound systems and televisions.

The Danish company is also planning to axe 300 jobs to save around $27.5 million.

It is, however, considering openning new shops in "growth markets" such as Russia and China.

Bang & Olufsen's chief executive Karl Kristian Hvidt Nielsen admitted that sales have been hit across the board by the worldwide financial turmoils and no longer have cash to blow on audio products costing anything between €7000 and €20,000.

Gartner telecoms analyst Carolina Milanesi added to the FT: "What Bang & Olufsen was trying to do with their devices was not fitting the current environment ... people are looking to spend less, not more, on phones".