Sony Ericsson 4Q Profit Buoyed By Walkman Phones

STOCKHOLM -(Dow Jones)- Mobile phone maker Sony Ericsson Wednesday said fourth-quarter net profit nearly tripled from the same period a year earlier, as the launch of Walkman-branded music phones boosted sales.

The world's fifth largest handset maker said net profit jumped to EUR144 million in the three months to Dec. 31 from EUR55 million a year earlier. The company said pretax profit advanced 47% to EUR206 million, while sales gained 15% to EUR2.31 billion.

Pretax profit was above expectations - analysts had expected around EUR174 million, while sales were slightly below estimates of EUR2.38 billion, according to a poll by SME Direkt.

Sony Ericsson enjoyed higher earnings as demand for phones continued to soar last year. The launch of Walkman phones has helped Sony Ericsson tap the rising popularity of music-enabled devices, and the company also moved to gain a greater share of fast-growing markets by introducing cheaper handsets in emerging markets.

Sony Ericsson said it has sold 3 million Walkman-branded phones since their launch in August 2005.

"We are now seeing the benefit of our earlier investments in research and development which have enabled us to expand the product lineup and successfully appeal to new consumers with products like the Walkman phone series," Chief Executive Miles Flint said in a statement.

At 0809 GMT, Ericsson stock was down SEK0.50, or 1.9%, at SEK26.50 in an overall weaker market.

Sony Ericsson said it sold some 16.1 million handsets in the fourth quarter, up from 12.6 million a year earlier. For all of 2005, it offloaded 51.1 million phones, compared with 42.5 million in 2004.

Prices continue to be pressured, with a large part of the overall market growth stemming from developing regions such as China and India, where purchasing power isn't as great as more mature economies.

Still, consumers in the U.S. and Europe were willing to part with their money to get the latest features in some high-end phones.

Sony Ericsson said the average price per phone sold dropped 10% to EUR143 from EUR159 in the fourth quarter of 2004. The average selling price is a key metric for financial analysts.

"Sony Ericsson did well in the high-value phones segment. Profit was clearly better than we had expected," said Nicolas von Stackelberg, an analyst at Sal. Oppenheim in Germany. Stackelberg has a neutral rating on Ericsson.

Stackelberg said a favorable tax rate also likely helped boost net profit.

Sony Ericsson's first Walkman-branded phone, the W800, has enjoyed favorable reviews and was initially sold out in some markets. The phone features a two megapixel camera, a built in music player and can store around 150 songs in its standard configuration.

Company Web site: http://www.sonyericsson.com

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

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Posted to the site on 18th January 2006