Sony Ericsson posts drop in Q1 profit and sales

Sony Ericsson posted a significant drop in first-quarter profits and sales.

Tough market conditions and fewer new product launches have helped drive down first-quarter profit at mobile phone maker Sony Ericsson Mobile Communications.

Net income in the first quarter plunged to Euro 32 million (US$41 million as of March 31, the last day of the period reported) from Euro 82 million in the same period a year earlier, Sony Ericsson said. Income before taxes also fell, to Euro 70 million from Euro 97 million a year earlier. Sales dipped to Euro 1.29 billion from Euro 1.34 billion, the company said.

Although Sony Ericsson shipped more phones in the first quarter, up to 9.4 million units from 8.8 million a year earlier, the average selling price fell due to weak market demand in general and its mature product line-up in particular, it said.

In addition, Sony Ericsson and other mobile phone manufacturers saw their inventories build up in the fourth quarter and carry over into the first quarter, adding to price competition, the company said.

In a move to improve its bottom line and gain market share, Sony Ericsson, a 50-50 joint venture between Japan's Sony Corporation and Sweden's Telefonaktiebolaget LM Ericsson, has announced several new products, to be launched over the next two quarters.

With an eye on the budding market for phones equipped to download and play music, Sony Ericsson is rolling out a new phone with the Walkman brand, which has appeared on more than 350 million Walkman music players. The handset will play open music file formats such as MP3 and Advanced Audio Coding (AAC).

In addition to two new 3G (third-generation) mobile broadband phones, the company is also launching its first 2 megapixel auto focus camera phones.

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John Blau

IDG News Service
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