Sony Ericsson Sees 2Q Mobile Phone Market At 180 Million Units

STOCKHOLM -(Dow Jones)- Sony Ericsson estimates 180 million mobile phones were sold around the world in the second quarter of the year, Chief Executive Miles Flint told Dow Jones Newswires Friday.

"The global handset market grew faster than expected during the quarter, primarily because of increased demand in the lower price segments in both mature and emerging markets," he said in a telephopne interview.

Flint also repeated Sony Ericsson's forecast of 720 million mobile phones to be sold globally in full year 2005.

Sony Ericsson, a joint venture of Japan's Sony Corp. (SNE) and Sweden's Telefon AB LM Ericsson (ERICY), sold 11.8 million phones in the second quarter.

Flint said Sony Ericsson gained market share in the second quarter and that the aim is to continue on that path.

"We have deliberately invested in product development and also in marketing during the quarter," he said, explaining the gains.

The investments have also contributed to a weaker margin compared with the second quarter of 2004, he admitted.

Sony Ericsson's pretax profit margin was 5.4% in the quarter, down from 7.5% a year ago.

Flint said the company will expand its product portfolio as the market becomes more segmented.

"We need more products, but not as many as our competitors have," he said.

Sony Ericsson has historically focused on more expensive and advanced mobile phones for the high end of the market.

The company is now introducing more products that also address the fast-growing emerging markets, but still shies away from ultra low-priced phones.

Flint said consumers in emerging markets want to have a phone that is functional, but also different and attractive.

"Differentiation is the strategy. Design is a key factor," Flint said.

He noted Sony Ericsson is enjoying good business in emerging markets.

Flint said he doesn't see any immediate need for consolidation moves in the industry, and noted that some recent attempts have been failures.

China cellphone maker TCL Communication Technology Holdings Ltd. (2618.HK) in May dismantled a joint venture set up less than a year earlier with France's Alcatel SA (ALA).

He wouldn't comment on Siemens AG's (SI) sale of its handset business to Taiwan's Benq Corp. (2352.TW).

He noted however that in a fast-moving business, mergers may not always be the best way forward.

"You don't want to be slowed down," he said.

Sony Ericsson is itself a merger of the handset units of Ericsson and Sony that was completed in 2001.

-By Magnus Hansson, Dow Jones Newswires;+46 8 545 130 91, magnus.hansson@dowjones.com

(END) Dow Jones Newswires"

Posted to the site on 15th July 2005