Sony Ericsson in Q3 2010 ...
>> Sony Ericsson Swings to Quarterly Profit
Average selling price of its phones improves YoY, so do margins
Aude Lagorce (London)
MarketWatch
October. 15, 2010
marketwatch.com
Sony Ericsson Mobile Communications on Friday reported its third consecutive quarter of profits, confirming its gradual return to form.
In the three months to September 30 the mobile-phone-making joint venture of Japan’s Sony Corp.and Sweden’s Ericsson AB earned 49 million euros ($69 million). That compared to a loss of €164 million in the year-earlier period.
Analysts, on average, expected the phone maker to report a profit of €64 million, according to a poll of three analysts conducted by Dow Jones Newswires.
Sales were roughly flat at €1.6 billion.
The number of units shipped dropped 26% as the company continued to trim its portfolio, while the average selling price (ASP) of its devices slipped to €154 from €160 in the second quarter. Still, it was much better than the €114 of a year earlier and that helped the gross margin nearly double to 30% and the operating margin turn positive, to 4%, compared to a negative 12% a year earlier.
“Our third consecutive quarter of profitable results illustrates that Sony Ericsson’s overall performance is stabilizing. Our strategy to focus on the smartphone segment is succeeding and smartphones now comprise more than 50% of our total sales,” Chief Executive Bert Nordberg said in a statement.
Geoff Blaber, analyst at U.K. telecoms consultancy CCS Insight, called the results a “mixed bag” and drew attention to the decline both in units shipped and average selling price.
“The business is clearly stabilizing but the sequential decline in shipments and ASP is a clear sign that the recovery is fragile. Sony Ericsson needs to urgently strengthen its portfolio in the face of mounting Android competition,” he said.
After spending several years trying to gain a foothold in the market for basic phones, Sony Ericsson decided to refocus its portfolio on the lucrative smartphone segment. It was a risky gamble as competition in that market is only increasing. Over the past two years new players such as Apple Inc. and Google Inc. have entered the field while South Korean makers like Samsung have upped their game, but the move seems to be paying off for Sony Ericsson, which has recently enjoyed significant success with models likes the Xperia X10 and the Vivaz.
These handsets run on Android, the ever more popular operating system created by Google, but more efforts are needed.
“Differentiation, tighter integration with broader Sony services and improved time to market are essential if Sony Ericsson is going to execute against the ambitious goal of becoming the leading manufacturer of Android devices,” Blaber said.
Also Friday Sony Ericsson reaffirmed its forecast for a slight growth in units in the global handset market in 2011. ###
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>> Sony Ericsson Reports Third Quarter 2010 Results
Sony Ericsson Press Release
October 15, 2010
hugin.info
Q3 Highlights:
• Turnaround continues with third consecutive quarter of profits
• Continued success of smartphone portfolio keeps ASP at high level
• Launch of Xperia™ models in new markets, including China and the U.S
The consolidated financial summary for Sony Ericsson Mobile Communications AB (Sony Ericsson) for the third quarter ended September 30, 2010 is as follows [with some data converted to USD]:
Q3 2009 Q2 2010 Q3 2010
=========== =========== ===========
Number of units shipped (millions) 14.1m 11.0m 10.4m
Sales (Euro m.) €1,619m €1,757m €1,603m
Sales (USD m.) $2,178m $2,145m $2,182m
Gross margin (%) 16% 28% 30%
Operating income (Euro m.) -193m 36m 63m
Operating margin (%) -12% 2% 4%
Restructuring charges (Euro m.) 2m 32m 4m
Op income excl. restructuring (Euro m.) -191m 68m 67m
Op margin excl. restructuring charges (%) -12% 4% 4%
Income before taxes (IBT) (Euro m.) -199m 31m 62m
IBT excl. restructuring charges (Euro m.) -198m 63m 66m
Net income (Euro m.) -164m 12m 49m
Average selling price (Euro/USD) €114 / $153 €160 / $195 €154 / $210
Bert Nordberg, President & CEO of Sony Ericsson commented, “Our third consecutive quarter of profitable results illustrates that Sony Ericsson’s overall performance is stabilising. Our strategy to focus on the smartphone segment is succeeding and smartphones now comprise more than 50% of our total sales. During the quarter, we launched our Android-based Xperia™ models in new markets, such as China and the U.S., and it is our ambition to become the global number one handset provider on the Android platform.”
Income before taxes for the quarter excluding restructuring charges was a profit of Euro 66 million following the positive effects of the transformation programme. Net income for the quarter was Euro 49 million, an increase of Euro 213 million year-on-year and of Euro 37 million sequentially.
The gross margin percentage was 30% and almost doubled year-on-year, reflective of the company turnaround.
Units shipped in the quarter were 10.4 million, a decrease of 26% year-on-year and down 5% sequentially. Average selling price (ASP) in the quarter remained at a high level of Euro 154, a 34% increase year-on-year and a decrease of 4% sequentially, due to product and geographical mix. As a result, sales for the quarter were Euro 1,603 million, essentially flat year-on-year and a 9% decrease sequentially.
Sony Ericsson’s net cash position as of September 30, 2010 was Euro 538 million. The negative cash flow from operating activities was Euro 54 million, mainly due to payments during the quarter related to the transformation programme.
Market share in unit base for the quarter remained flat sequentially and is estimated to be approximately 4%. The value market share is estimated to be approximately 6%.
Sony Ericsson maintains a forecast of slight growth in units in the global handset market in 2010. ###
- Eric - |
