Sony Ericsson sees profits halved

Sony Ericsson, the Swedish-Japanese mobile phone maker, said on Wednesday its profits plunged in the first quarter as its average selling price dropped due to its reorientation towards low and mid-end phones.

In the first three months of the year, the group registered a net profit of €133 million ($212 million), down by 47.6 percent from €254 million a year earlier.

Sales dipped by 7.6 percent in terms of value to €2.7 billion during the period.

Sony Ericsson, the world’s fourth-biggest mobile phone manufacturer, sold 22.3 million handsets during the period at an average selling price of €121, compared to 21.8 million at €134 last year.

The drop in sales, which was expected after the group issued a profit warning in March, was attributed to shrinking demand for mid- and high-end mobile phones on the company’s main market, Europe, amid an economic slump.

In the first quarter, the group also suffered from a shortage of parts for the company’s much in demand mid-end phones.

Sony Ericsson said however that it expected a recovery in the second half of the year.

“Sony Ericsson continues to invest in expanding its product portfolio to appeal to a wider variety of consumers in both new and existing markets,” Sony Ericsson president Dick Komiyama said in a statement.

“Our product announcements during the first quarter have been well received by the industry, and we expect to see a positive effect from these announcements during the second half of 2008,” he said.

For the past year Sony Ericsson has tried to widen its product portfolio and increase its presence on new markets in order to reduce its dependence on its traditional market, Europe.

The company hopes its strategy will propel it into the top trio of mobile phone makers by 2011.

Sony Ericsson, which is not listed on the stock exchange, is a joint venture between Japanese electronics giant Sony and Ericsson of Sweden.


Ericsson profits double on sale of Sony stake

The Swedish telecommunications equipment maker Ericsson posted Wednesday a first quarter net profit that was more than double the level recorded a year earlier, owing to a major one-off divestment.

Ericsson profits double on sale of Sony stake

The world leader in mobile telephone networks also said sales had fallen by four percent to 50.97 billion kronor ($7.6 billion), while operating profit excluding the sale of its half the joint venture Sony Ericsson was 56 percent lower at 2.8 billion.

Net profit leapt however by 116 percent to 8.8 billion kronor thanks to a 7.7 billion kronor contribution from the sale of a 50-percent stake in Sony Ericsson, a statement said.

Meanwhile, “sales of high-performance mobile broadband developed well in North America, Japan and Korea, while other regions such as Europe including Russia, parts of Middle East and India were weaker,” chief executive Hans Vestberg said.

Cheuvreux analyst Odon De Laporte highlighted an increase in Ericsson’s gross margin since the fourth quarter of 2011.

Gross margin is the percent of total sales that a company retains after taking into account the cost of their production and associated services.

“Sure, the report shows there is low activity, especially for the network division, but seeing the gross margin bouncing back is definitely a relief,” Laporte was quoted by Dow Jones Newswires as saying.

Ericsson’s gross margin climbed to 33.3 percent in the first three months of the year, from 30.2 percent in the fourth quarter of 2011, but remained below the 2011 first quarter level of 38.5 percent.

On February 16, Sony said it had finalised the acquisition of Ericsson’s share of their mobile telephone joint venture Sony Ericsson, which was renamed Sony Mobile Communications.

The transaction, which had a total value of 1.05 billion euros, included patents and licenses.