Earnings: Sony Ericsson Reports Less Than Expected Loss
Sony (NYSE: SNE) Ericsson (NSDQ: ERIC) reported third quarter earnings today, and as expected, recorded a loss. But the net loss of $33.7 million (€25 million)—compared to a net profit of $358.5 million (€267 million) year on year—was smaller than analysts had predicted. The forecast had been for a $96.7 million (€72 million) loss.
More Details:
— Sales hit: The world’s fifth largest handset maker, which put its market share at 8 percent shipped 25.7 million units in Q3, a sequential increase but flat year-on-year. Sales for the quarter were down 10 percent to $3.77 billion (€2.81 billion), a decrease of 10 percent compared to the third quarter of 2007.
— Competition takes toll, ASP falls:: Its larger rival Nokia (NYSE: NOK) cited yesterday, Sony Ericsson blamed the hit in sales on fluctuating exchange rates and a move of the product mix to more lower priced phones. Increased competition for high end phones took its toll as well. The average selling price (ASP) of a phone fell to $146 (€109) down from $15 (€116) in Q2, and from $161 (€120), year on year.
— Restructuring progressing: Earlier this year, Sony Ericsson announced two profit warnings. But the Q3 report did not mention more. Instead, SE president Dick Komiyama said in the report their plans to reduce operating expenses by $403 million (€300 million) annually with the full effects expected in the second half of 2009 were “progressing in line with expectations.”
—Market forecast: Sony Ericsson forecasts that the global handset market for 2008 will grow at a rate of around 10 percent from more than 1.1 billion units in 2007. They also predicted that the industry ASP will continue to decline, with the majority of growth coming from emerging markets where lower priced phones dominate.
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