Sony Ericsson posts €31 million Q3 profit, warns of slowdown

Sony Ericsson reported a €31 million profit for the third quarter on the back of higher smartphone sales, but CEO Bert Nordberg said there are clear signs that the European market is weakening and that consumers are waiting longer before upgrading their handsets.


In interviews, Nordberg warned though that weak consumer confidence amid Europe's debt crisis could bring on more pain. "We see clear signs that the Western European market is weakening," he told the Wall Street Journal. "Consumer sentiment is weakening and consumers are waiting longer to upgrade their handsets." Similarly, he told Reuters: "If the consumer confidence problem continues it will hurt the mobile industry." 

However, Sony Ericsson's third quarter reported sales and pretax profits exceeded analysts' forecasts helped by strong sales from Asia. The JV reported that sales of €1.6 billion, flat from the year-ago period but higher than a poll of 15 analysts conducted by Bloomberg that had forecast €1.36 billion. However, profits fell 53 per cent to €31 million, down from €62 million a year ago.

According to Dow Jones Newswires, Nordberg said he was satisfied with the company's handset portfolio and wasn't planning to launch LTE or phones with dual-core processors this year.

"But we got the machine running and on the Japanese market we have been very successful with our Xperia Arc and Arco models," said Nordberg, adding that the company would shift its entire handset portfolio to smartphones during 2012.

Commenting on Sony Ericsson's third quarter results, Swedbank analyst Hakan Wranne told Dow Jones Newswires that the big challenge for the company is not only to have constantly competitive products, but also to develop them with a cost structure which is limited enough to make some bottom line profit. "They've kept the costs at the level we had imagined, but with this topline their costs are still too high for a decent profitability," Wranne said.

Notably, Nordberg declined to comment on a Journal report that Sony is nearing a deal to buy Ericsson's portion of the 50-50 joint venture in a bid to integrate the handset company with its tablet and PlayStation gaming console efforts.

For more:
- see this release
- see this Bloomberg article
- see this Dow Jones Newswire article
- see this Reuters article
- see this Mobile News article

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