Sony Ericsson posts profit as sales fall

Mobile phone manufacturer Sony Ericsson on Thursday reported a return to profit in 2010 thanks to its Android-based smartphones but its fourth quarter earnings and sales fell far short of analyst expectations.

Sony Ericsson posts profit as sales fall

The Japanese-Swedish group, now the sixth-biggest player in the global market, said that in the three months to December it made a net profit of just €8 million ($10.8 million) on sales down 13 percent at €1.53 billion.

While the net profit was a vast improvement over the €167 million loss posted in fourth quarter 2009, it missed analyst estimates polled by the Dow Jones Newswires, which averaged €68 million.

The company’s fourth quarter sales also fell far short of analyst expectations of €1.75 billion.

The company explained in its earnings statement that its fourth quarter sales were “somewhat constrained by a lack of new product launches during the quarter.”

Following the news, Sweden’s Ericsson saw its stock price shed 0.39 percent to 76.10 kronor ($11.47) in early afternoon trading on a Stockholm stock exchange down 1.09 percent.

For all of 2010, the picture was a bit brighter, with a net profit of €90 million ($121 million), after a net loss 836 million in 2009.

However, full-year sales were down seven percent to €6.29 billion.

In its efforts to return to profit, Sony Ericsson has over the past year laid off some 4,000 employees and has refocused its business on smart phones based on the Android platform developed by Google.

Last year “was a turnaround year for Sony Ericsson. Our four consecutive quarters of profit reflect the success of our shift towards an Android-based smartphone portfolio,” company president and chief executive Bert Nordberg said in the earnings statement.

The mobile phone maker estimates it last year accounted for four percent of the global market of 1.2 billion phones sold and six percent in terms of value.

Sony Ericsson, which in 2010 shipped 43.1 million phones, said it “forecasts modest growth in units in the global handset market for 2011.”

“It’s a disappointment on all levels,” Redeye telecom analyst Greger Johansson told AFP, pointing out that the company was mainly hurt because “they didn’t have new phones during the (fourth) quarter.”

Sony Ericsson also suffered from the “strong competition” in the sector and “currency effects,” he said.

“Their strategy is right but it’s not sure they’re going to make it because they have big competitors also with good Android phones,” Johansson said, adding that a verdict on the company will “have to wait for a quarter of two because they have interesting phones coming.”

In terms of volume, the booming mobile phone market remains dominated by Finland’s Nokia, which boasts the market leader title since 1998, followed by Korean firms Samsung and LG, then Apple, Canadian BlackBerry maker RIM, and finally Sony Ericsson, several third quarter analyst studies showed.

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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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