Mobile phone maker Sony Ericsson said yesterday its net profit fell by 48 percent in the first quarter on weak sales, higher taxes and disruptions to its supply chain following Japan’s earthquake and tsunami.
The company, a joint venture between L.M. Ericsson and Sony Corp, posted a profit of 11 million euros (US$15.8 million) for the quarter, down from 21 million euros a year ago, when earnings were boosted by a tax benefit.
Revenues during the three months ending on March 31 fell by 19 percent to 1.15 billion -euros from 1.41 billion euros 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.
Helena Nordman-Knutson, an analyst with Ohman Fondkommision in Stockholm, said the result was largely in line with expectations and it was positive the company hadn’t seen any price pressure during the quarter.
The low volumes and higher average selling price were mainly due to Sony Ericsson’s shift toward smartphones, she added.
“The low volumes during the quarter were not due to the earthquake in Japan, but because they didn’t have any phones to sell,” Nordman-Knutson said, adding the main effect of the new models is expected to be seen in the second 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 this year.
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