Sony Ericsson profits fall on cheaper phones

11-10-2007

by Charlie Taylor

Mobile manufacturer Sony Ericsson's third quarter profit fell by 10 percent despite shipping more units over the past year.

The firm said on Thursday that profit declined from the EUR298 million it clocked up for the third quarter of 2006 to EUR267 million this year.

Pretax profit fell 11 percent to EUR384 million from EUR433 million in the year-ago quarter, while operating income slipped from EUR427 million to EUR393 million. Sales, on the other hand, rose 6.7 percent to EUR3.11 billion versus EUR2.91 billion a year ago.

During the past trading year, the number of mobile phones shipped by Sony Ericsson increased by 31 percent, with 26 million mobiles shipped during the third quarter of 2007, compared to 19.8 million for the same period in 2006.

The company, which is the world's fourth largest mobile manufacturer, attributed its quarterly fall in profits to the fact that it was now selling cheaper phones. During the third quarter, the average selling price for one of Sony Ericsson's mobiles declined from EUR147 a year ago to EUR120.

Despite the drop in profits, the firm's outgoing president Miles Flint remained upbeat. "The quarter has seen Sony Ericsson continue to generate significant year-on-year volume growth with a portfolio of products spread across the widest variety of price points in the company's history," said Flint.

"Low-and mid-tier priced models such as the W200 Walkman phone and simple 'talk and text' range of phones have been key volume drivers during the quarter, while the high-spec P1 smartphone and W580 slider Walkman phone have been well received and strengthen the portfolio at the higher-end," he added.

Sony Ericsson forecasts that the 2007 global handset market will be above 1.1 billion units. The company gained around 1 percent of market share compared with the

same period last year and finished the third quarter at over 9 percent, it said.

The company, which is a joint venture between Japan's Sony and Sweden's Ericsson, celebrated its sixth anniversary on 1 October 2007. It currently employs over 7,000 people worldwide in Europe, Japan, China and America.