Sony Ericsson reports profits plunge

Mobile phone maker Sony Ericsson on Friday reported a €199 million ($297 million) net loss and a 42 percent drop in sales for the third quarter.

The joint Japanese-Swedish enterprise formed in 2001 said net earnings came to €164 million in the July-September period after a shortfall of €25 million in the corresponding period of 2008.

Third quarter sales fell 42 percent to €1.62 billion from 2.80 billion a year earlier. Compared with the second quarter sales were down 4.0 percent.

According to the company’s management, the firm’s owners have invested funds to strengthen the troubled phone maker’s balance sheet. Ericsson has guaranteed half of the €350 million provided.

Sony Ericsson sold 14.1 million telephones during the period, up 2 percent on the second quarter, but down 45 percent on the corresponding period of 2008.

The company forecast that the global market for mobile telephones would decline 10 percent in comparison with 2008. The firm estimated that Sony Ericsson’s share of the market came in at around 5 percent during the third quarter.

The company has suffered from delays in its operations on the smartphone market, currently dominated by Apple’s iPhone and the Blackberry by Research in Motion.

But outgoing head Dick Komiyama said: “Having refreshed our brand we are now better positioned to support the launch of new products … in fourth quarter 2009.”

Komiyama was replaced on Thursday by Bert Nordberg.

Sony Ericsson is not quoted on the stock exchange and its accounts remain integrated with those of Sony and Ericsson.

In early trade on the Stockholm exchange Ericsson was showing a gain of 1.5 percent to 72.30 kronor on an overall market that was 0.8 percent stronger.

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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.