Sony Ericsson Sales Down a Third - Plunges Back into Financial Loss

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Sony Ericsson has posted a sharp drop in revenues and dropped back into a quarterly loss which the company put down to supply chain constraints from the Japan earthquake.

Revenues dropped by nearly a third (32%) to EUR 1.193 billion (US$1.7 billion) from EUR 1.757 billion a year ago. Handset sales dropped to 7.6 million from 11 million.

The company posted a net loss of EUR50 million (USD71 million), compared to a profit of EUR12 million (USD17 million) a year ago. The profit last year included restructuring costs which did not recur this year. Excluding the restructuring costs, the company plunged from an operating income of EUR68 million to a loss of EUR37 million

Bert Nordberg, President and CEO of Sony Ericsson commented, "Sony Ericsson's second quarter profitability was affected by the March 11 earthquake in Japan.  We estimate that the impact of earthquake-related supply chain constraints on our portfolio was close to 1.5 million units, with most of the effect in the early part of the quarter.  Our shift to Android-based smartphones continues with smartphone sales accounting for more than 70 percent of our total sales during the quarter."

Average selling price (ASP) of handsets for the quarter was EUR 156 (US$221), a 3% decrease year-on-year but an 11% increase sequentially. The year-on-year decrease is due to product and geographic mix and price erosion.  The sequential increase in ASP is attributed to favorable product and geographic mix, more than offsetting price erosion and unfavorable foreign exchange rates.

Sony Ericsson estimates that its share in the global Android-based smartphone market during the quarter was approximately 11% in volume and 11% in value. 

Sony Ericsson maintains its forecast for modest industry growth in total units in the global handset market for 2011.

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