Sony Ericsson Phone Business Hurt By Component Shortages - InformationWeek

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10/15/2010
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Sony Ericsson Phone Business Hurt By Component Shortages

Now back on track following third-quarter shortages, the phone maker sees an upside in social networking-centric smartphones.

Sony Ericsson said that component shortages led to declines in handset shipments and sales in the third quarter, Reuters reported in a poll of analysts.

"Our volume did not meet expectations. That [supply chain shortages] is the one reason sticking out," said Bert Nordberg, president and CEO of the world’s fifth-largest mobile phone maker.

Nonetheless, after suffering seven straight quarterly losses, Sony Ericsson pulled itself back into the black by cutting costs and revamping its portfolio. The phone maker hopes to see an increase in profit by offering social networking-centric smartphones that feature PC-type functions, such as the Xperia X10, Vivaz X10 mini and X10 mini pro. Third-quarter sales were estimated by analysts in a Reuters poll to be 1.8 billion euros, on average, those numbers were largely flat with the year ago's 1.6 billion euros.

In the third quarter, which ended Sept. 30, the company shipped 10.4 million handsets, missing the estimates made by 27 analysts in the Reuters poll. The analysts’ figures ranged from 10.5 million to 13.9 million shipments, Reuters said.

In the July-to-September period, average shipments for Sony Ericsson were forecast at 12 million phones, compared with 11 million in the second quarter.

The company, jointly owned by Sony Corp. and Ericsson, made far below a forecasted profit of 72 million euros in the poll, instead earning a pretax profit of 62 million euros ($87.28 million), compared with a loss one year ago of 199 million.

Rival handset makers HTC and Research in Motion both reported a strong quarterly increase in profits, citing rising demand for handsets. Apple, the most profitable handset maker, but number six in volume, will report results on Oct. 18. Handset leader Nokia’s report is due on Oct. 21, followed by Motorola, which is number 7, on Oct. 28. Quarterly reports are due at the end of the month from Korean-based cellphone makers Samsung and LG Electronics.

Sony Ericsson still forecasts slight growth in global handset units in 2010, according to the report. Nordberg said that Sony Ericsson’s overall performance is "stabilizing" and that smartphones now constitute more than half of total sales. "It is our ambition to become the global number-one handset provider on the Android platform,” he said.

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