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Sony Ericsson losses lower than expected

Mobile phone maker Sony Ericsson reported a quarterly loss on Friday that surpassed market expectations but, amid plunging sales for the company, it continues to face fierce competition in the smartphone market.

In the October to December period, the world’s fifth-biggest cell phone maker saw its net loss shrink to 167 million euros ($236 million) from 187 million a year earlier, but for the full-year the shortfall swelled from 73 million euros in 2008 to 836 million in 2009.

Sales plunged from 11.24 billion euros in 2008 to 6.79 billion in 2009, with volumes dropping from 96.6 million units sold to 57.1 million.

Sony Ericsson’s chief executive Bert Nordberg said the positive effects of a restructuring programme undertaken a year ago were expected to be seen as of the third quarter.

“2010 will still be challenging as the full benefit of cost improvements will not impact results until the second half of the year, however we are confident that our business is on the right track,” he said in the earnings report.

The quarterly loss was the company’s sixth straight quarter in the red, but it was better than analyst forecasts of a loss of 254 million euros.

The Ericsson share was up 2.40 percent at 72.50 kronor on the Stockholm stock exchange in mid-morning trading.

Sales in the quarter plunged by 40 percent from the same period a year ago to 1.75 billion euros, up however by three percent from the third quarter.

The Swedish-Japanese joint venture, the first of the big phone makers to present its earnings report, has cut thousands of jobs in the past year as it struggles amid competition from Apple and Research in Motion, the makers of smartphones iPhone and Blackberry.

The recent recession hit the mobile phone industry and Sony Ericsson hard in 2009. The company is basing its new strategy on entertainment applications.

“We will continue to focus on returning the company to profitability by establishing Sony Ericsson as the communication entertainment brand based on an exciting portfolio of mid- and high-end products,” Nordberg said.

Sony Ericsson’s strongest features are its camera and music applications, according to analysts.

Its average selling price per unit was 120 euros, compared to 121 euros a year earlier and higher than its traditional competitors Nokia, Samsung and LG.

The group said it expected “slight growth” in the global handset market in 2010.

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MOBILE

Minister bashes mobile firms’ ‘unrealistic’ claims

Sweden's mobile phone operators may face tougher regulations if they don't improve network coverage and provide customers with more accurate information, IT and Energy Minister Anna-Karin Hatt warned on Wednesday.

Minister bashes mobile firms' 'unrealistic' claims

Speaking at a conference organized by the Swedish Post and Telecom Authority (Post- och telestyrelsen, PTS), Hatt said the government would introduce tougher laws if mobile operators didn’t act on their own accord.

“Let me be absolutely clear with you. It’s not okay that Swedish mobile customers don’t get what they have a right to expect. This has to change. There has to be an end to unrealistic promises. There must be an end to mobile coverage maps that don’t have any connection to what people experience in reality,” the minister said.

Hatt explained that she personally thinks new laws are the best way to ensure changes in how mobile phone operators behave.

“The truth is that if you aren’t significantly better at living up to your customers’ expectations, if we can’t see a solution on the horizon to these problems, it’s long from certain that we’ll be able to avoid [new legislation],” she said.

According to the minister, mobile operators should be prepared to make large investments in their networks so that they provide adequate coverage and can handle increased usage.

On Tuesday, Hatt found herself in the firing line during a debate in the Riksdag with opposition lawmakers accusing her of being passive in the face of increasing numbers of consumer complaints about mobile phone service in Sweden.

The opposition Social Democrats have put forward a promise of tougher regulation for mobile phone operators should the party win the 2014 parliamentary elections.

When asked about the minister’s comments, a spokesman for mobile operator 3 (Tre) said there was no need to have legislation for network coverage.

“We welcome all initiatives to have more accurate maps,” he told the TT news agency.

“The minister is right that there are problems with network coverage maps, but there are already laws regulating that, such as the marketing act.”

He explained that the maps show a “theoretical” depiction of coverage, that can’t be guaranteed.

TT/The Local/dl

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