Sony Ericsson turns first profit - and it only took two years

16 Oct 2003

Two years after it was formed, the world’s number five handset maker Sony Ericsson has turned its first quarterly profit and said that it expects the run to continue into the fourth quarter this year. The company, a 50-50 venture between Sony of Japan and Sweden’s Ericsson, reported a EUR39 million pre-tax profit for the three months to the end of September, to prove wrong analysts who had predicted a loss in the region of EUR17.5 million; net profit was EUR62 million. Handset sales for the period were up 42% year-on-year to 7.1 million, driven, the company said, by the strong performance of its PDC and CDMA offerings in the Japanese market and its heavily-marketed T610 GSM handset worldwide. Despite this, the vendor has witnessed a small drop in its global market share to 6%, from 6.4% the previous quarter, but with revenues of EUR1.3 billion the company’s average selling price per phone stood at EUR184, one of the highest in the market.

Sony Ericsson said it expects its final quarter sales to improve upon the third quarter results, but warned that profit is likely to be lower as it pushes its entry-level handsets, including the T230, in the run up to Christmas. Other new launches will include the vendor’s first two clamshell phones and a successor to the popular high-end P800 smartphone. It also said that the market for replacement handsets was performing better than envisaged and upgraded its estimate of industry-wide handset sales for 2003 by 15 million to 450 million accordingly. Despite this, it noted that the better than expected second half performance will not offset pre-tax losses of EUR218 million from the first six months of the year, leaving the company in the red for the full year.

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