Sony Ericsson profit down 48%

Sony Ericsson's sales, profit and average handset prices all fell in the first quarter as it felt the effects of declining demand for its mid and high-range phones.

Net income plunged 48% to €133 million (US$211 million) as the company shipped 22.3 million phones for the quarter, up just 2% from Q1 2007.

The results were in line with the handset-maker's profit warning in March, when it advised European sales had fallen sharply.

Average handset sales price in the quarter slid from 134 euros a year ago to €121, while gross sales declined 7.6% to €2.7 billion. Gross margin was one percentage point lower than Q1 2007, 'reflecting a less favorable product mix,' Sony Ericsson said.

It said heavier R&D investment in new devices, up 30% over Q1 2007 to €339 million had helped push down net income.

Company president Dick Komiyama said the company could expect to see a positive effect from this R&D spending with the launch of new products in the second half of 2008.

The company expects the global handset market to grow 10% in 2008, mostly in emerging markets.