Sony Ericsson has returned to profit after is reported a EUR 21 million (US$28.5 million) net income for the first quarter of 2010 compared to a loss of EUR293 million (US$398 million) a year ago. This was despite a sharp fall in handset sales and revenues, but excluded restructuring costs.
Revenues dropped by 19% to EUR1.4 billion (US$1.9 billion) in Q1, compared to EUR1.74 billion (US$2.36 billion) a year ago and handset shipments fell by 28% to 10.5 million from 14.5 million a year ago.
Bert Nordberg, President, Sony Ericsson commented, "We are pleased to see the positive impact of both the launch of new products and the business transformation programme improving the company's results. The Xperia X10, our first android-based Communication Entertainment device featuring signature Sony Ericsson applications Timescape and Mediascape, and Vivaz, a beautifully designed, touch-screen Symbian phone started shipping towards the end of the quarter. Both models have been well received by global customers." He added, "Increases in both gross and operating margins show that we are on the right track to build the correct cost structure for our business organization and strategy. We will continue to work through the transformation programme to ensure that we are competitive."
Units shipped in the quarter were 10.5 million, a decrease of 28% compared to the same period last year, which the company said reflectede the streamlining of the portfolio over the past 12 months to focus on higher-end phones. Average selling price (ASP) increased 12% both sequentially and year-on-year to EUR 134 (US$182) during the quarter due to good sell through of existing models, new flagship phones starting to ship at the end of the quarter and a positive currency effect.
Market share in unit base for the quarter decreased by one percentage point sequentially and is now estimated to be around 4%.
Sony Ericsson maintains a forecast of slight growth in units in the global handset market in 2010.
Gross margin rose both sequentially and year-on-year, reflecting a more favourable product mix and the benefit of cost of sales improvements in the past year, including the resolution of certain royalty matters during the quarter.
The cost cutting programme, which started in mid-2008, with the aim of reducing annual operating expenses by EUR 880 million is continuing with the full benefit expected during the second half of 2010. Since the start of the programme, Sony Ericsson has reduced its global workforce by approximately 3,150 people to reach a total of 8,450 by March 31, 2010. The total restructuring charges taken to date are EUR 342 million.
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