Sony Ericsson Q1 profit drops 48 pct on weak sales

AP News
Posted: Apr 19, 2011 3:36 AM
Sony Ericsson Q1 profit drops 48 pct on weak sales

Mobile phone maker Sony Ericsson said Tuesday its net profit fell by 48 percent in the first quarter on weak sales, higher taxes and disruptions to its supply chain following the Japan earthquake and tsunami.

The company, a joint venture between L.M. Ericsson and Sony Corp., posted a profit of euro11 million ($15.8 million) for the quarter, down from euro21 million a year ago. Last year's result though was boosted by a tax benefit.

Revenues during the three months ending March 31 fell by 19 percent to euro1.15 billion from euro1.41 billion a year earlier.

Sony Ericsson said it shipped 8.1 million phones during the quarter _ a 23 percent decrease year-on-year _ but sold the phones for a 5 percent higher average price.

The company, which has tried to streamline its product portfolio to focus on higher-end smartphones, started selling its new Xperia arc, Xperia play and Xperia neo models at the end of the third quarter.

Sony Ericsson's President and CEO Bert Nordberg said smartphones accounted for more than 60 percent of the company's sales during the quarter and that the new models had been well received by customers.

"However, the Japan earthquake made it a challenging quarter operationally and we are experiencing some disruptions to our supply chain. We will continue to evaluate the situation," Nordberg added.

Sony Ericsson said it estimates its market share for smartphones during the quarter was about 5 percent in units and 3 percent in value.

The company said it forecasts modest growth in total units in the global handset market for 2011.