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Sony Ericsson upbeat despite $59.5m loss

Helsinki, July 16, 2011

Mobile phone maker Sony Ericsson forecast an upturn in the second half, as it posted a first quarterly loss since 2009 due to a parts shortage stemming from the March 11 earthquake and tsunami in Japan.

Chief executive Bert Nordberg said yesterday most of the hit was felt in the early part of the quarter, and that this would be negligible in the third quarter.

"There might be some minor spillover. In our planning this is behind us," he was quoted as saying in our sister newspaper, the Gulf Daily News.

Sony Ericsson, owned 50-50 by Sweden's Ericsson and Japanese group Sony, made a pretax loss of 42 million euros ($59.5 million).

It had recorded five consecutive quarters of profit since its last loss in the final three months of 2009. The 42 million loss was at the low end of analysts' estimates, which ranged from a 68 million loss to a 77 million profit.

Sony Ericsson sold 7.6 million phones in the second quarter, compared with forecasts for 8-11 million, as earthquake-related supply chain constraints cut sales of mostly expensive models by 1.5 million phones, or some 400 million euros.

"Volumes were lower than even we thought, and we were below consensus," said Hakan Wranne, analyst at Swedbank Markets.

"The product portfolio looks pretty good ahead of the second half, and if they manage to increase volume by a couple of million units they should be making profits for the rest of the year - not large profits, but a bit above zero where we thought they would be," Wranne said.

Sony Ericsson's forecast for a better second half was based on new smartphone models and an easing supply chain shortage.

Nordberg said it was still his ambition to report better results for 2011. To do that, second-half operating profit would have to grow 73 per cent to 176 million euros.

He said demand for smartphones, whose prices have started to fall to below 200 euros, remained healthy and was hitting the sale of mid-range phones, a market he said he was "nearly willing to call ... collapsing". – TradeArabia News Service

Tags: Helsinki | mobile phone | loss | Sony Ericsson | Second half |


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