Sony Ericsson Posts Profit but Sales Disappoint

The difficulty for Sony Ericsson has been sudden steep competition from RiM (Blackberry) and Apple (iPhone), forcing the company to refocus its business on the high end of the handset market.

Mobile phone manufacturer Sony Ericsson reported a third quarter running of net profits on Oct. 15 following dramatic restructuring after a bad patch last year. But its sales for the quarter fell far below expectations.

The company, the fifth-biggest player in the global sector, said that in the three months ending in September, it had made a net profit of 49 million euros (US$69 million), compared to 193 million in the red in the same quarter last year. The company's sales however slipped by 1% to 1.60 billion euros.

The outcome fell far short of the figures expected by analysts who in a poll by Dow Jones Newswires had forecast a net profit of 67 million euros on sales up 13% at 1.87 billion.

Sales and the net outcome had plunged in 2009. Last year the company launched a program to reduce costs involving an extra loss of jobs amounting to nearly 2,000 cuts.

The difficulty for Sony Ericsson, as for Nokia in neighboring Finland, has been sudden steep competition from Canadian RiM (Blackberry) and especially from American Apple (iPhone), forcing the company to refocus its business on the high end of the handset market.

Sony Ericsson said it sold 10.4 million handsets in the third quarter, a 26% plunge from the same period a year ago.

However, the average sales price has soared as the company has refocused on the high-end, especially on its models based on Google's Android operating system. In the third quarter, Sony Ericsson averaged 154 euros per handset sold, a jump of 34% from the same three-month period in 2009.

"Our third consecutive quarter of profitable results illustrates that Sony Ericsson's overall performance is stabilizing," company chief executive Bert Nordberg said. "Our strategy to focus on the smartphone segment is succeeding and smartphones now comprise more than 50% of our total sales," he added.

In the third quarter, he pointed out, Sony Ericsson had launched its new Android-based Xperia phone models in new markets like China and the United States. "It is our ambition to become the global number one handset provider on the Android platform," Nordberg said.

Copyright Agence France-Presse, 2010

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