Sony Ericsson swings to $70.6m loss

Dylan Bushell-Embling
18 Jul 2011
Daily News

Sony Ericsson swung to a quarterly loss – its first since 2009 – blaming component shortages and a faster than expected collapse of the low-to-mid end phone market.

The company reported a €50 million ($70.6 million) net loss for the second quarter, with sales slumping 32% year-on-year to €1.19 billion.

Sony Ericsson estimated that lingering supply chain shortages stemming from the Japanese earthquake and tsunami impacted shipments by nearly 1.5 million units during the quarter.

Total shipments shrank slightly less than sales – by 31% to 7.6 million - but ASP also dipped 3% to €156.

Earnings were also impacted by a far faster than expected deterioration in the feature phone market, Sony Ericsson CEO Bert Nordberg toldBloomberg. He said the decline in Western Europe in particular has been “enormously big.”

But the company, which is forecasting a modest increase in handset sales for the overall industry, aims to return to profitability in the second half.

In another indication of Sony Ericsson's growing reliance on the high end, it revealed that smartphones now accounted for more than 70% of total sales.

The company is concentrating on Android smartphones, but the recent discoverythat Microsoft has bought up the domains and has spawned speculation that Sony Ericsson has decided to develop a WP7 handset.

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