Sony Ericsson reports $245M loss, but gets new financing

Sony Ericsson's troubles continued in the third quarter, with the struggling handset maker posting its fifth straight quarterly loss and showing weakness in several key metrics. The joint venture between Japan's Sony and Sweden's Ericsson posted a $245 million net loss in the quarter, less than analysts had anticipated but wider than the $37.7 million loss it had in the year-ago period.

The company, which just officially switched its CEO yesterday, is in the process of shoring up its financial position while trying to regain momentum and refresh its image. Bert Nordberg, the head of Ericsson's Silicon Valley unit, succeeded outgoing Sony Ericsson President and CEO Dick Komiyama. The company plans to launch new higher-end phones in the fourth quarter, including the Aino and Satio.

Yet the current state of the company is grim. Sales totaled $2.4 billion, tumbling from $4.17 billion in the year ago period. Sony Ericsson shipped 14.1 million units in the quarter, up slightly sequentially, but down from the 25.7 million units it shipped in the third quarter last year. The company's average selling price was $169, up from $162 in the year-ago quarter, but down sequentially from $181. Sony Ericsson said its market share stood at five percent.

In one bit of bright news for the joint venture, Sony Ericsson said that it had signed credit facilities of $676.3 million, with around $520 million of them guaranteed by its parent companies on a 50/50 basis. "We believe this removes concerns around any necessity of injecting cash into the joint venture in the short term," wrote UBS analyst Maynard Um in a research note. The handset maker said it still expects the overall handset market to contract by 10 percent this year, but added that the market's decline is slowing.

Summarizing Sony Ericsson's position, industry analyst Jeff Kagan noted: "Smartphones are where the growth is right now and Sony Ericsson is just not there." Kagan offered a similar assessment for Nokia, which yesterday also reported sluggish earnings.

For more:
- see this release [1]
- see this this Bloomberg article [2]
- see this Dow Jones Newswires article [3] (sub. req.)

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