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Sat, Apr 17, 2010 - Page 10 News List

Phone maker Sony Ericsson surprises on the upside in Q1

BACK IN BLACKThe mobile phone maker saw stronger margins as its cost-cutting program bore fruit and market response to new phones flourished


Mobile phone maker Sony Ericsson yesterday reported an unexpected net profit of 21 million euros (US$29 million) in the first quarter, compared with a loss of 293 million euros a year ago, thanks to new products focused on the high-end market and continued efforts to shave costs.

Although sales dipped in the three months ended March 31 to 1.4 billion euros, from 1.74 billion euros, the gross margin of the LM Ericsson and Sony Corp joint venture still jumped to 30.6 percent from 8.4 percent.

Sony Ericsson CEO Bert Nordberg said new high-end products, such as the group’s Xperia X10 and Vivaz which began shipping at the end of the first quarter, had been “well-received” by the market.

Falling operating costs, which dropped to 423 million euros from 528 million euros, also helped bump up its bottom line.

“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,” Nordberg wrote in the income statement.

In 2008, Sony Ericsson launched a cost-cutting program under which it had by the end of the quarter slashed its global work force by about 3,150 people to 8,450.

Sony Ericsson, which aims to cut operating costs by 880 million euros said the program was running according to plan, with full benefit still expected in the second half of this year. Total costs associated with it now amounts to 342 million euros.

The group said it shipped 10.5 million units in the quarter, down 28 percent from a year ago, but up from the 14.6 million units shipped in the fourth quarter.

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