Sony Ericsson posts Q3 profit, but hit by component shortages

Sony Ericsson reported its third straight quarterly profit, but its sales were crimped in the third quarter by components shortages. The handset maker continues to revitalize its business on the back of Google's Android platform, but its unit shipments were lower both on a sequential and year-over-year basis.

Although the company still sells phones running on the Symbian platform, Sony Ericsson confirmed late last month it won't produce any new products running on Symbian. The decision means Sony Ericsson's ongoing smartphone strategy--and its financial viability--will hinge largely on Android.

The joint venture between Japan's Sony and Sweden's Ericsson posted a profit of $69 million in the quarter, much improved from its $232 million loss in the year-ago period but still below analysts' expectations. Nonetheless, the company's string of profitable quarters that began in the first quarter of this year is notable since Sony Ericsson had been mired in losses for six quarters preceding that.

Sony Ericsson shipped 10.4 million units in the quarter, down from 11 million in the second quarter and 14.1 million in the year-ago period. The company's average selling price declined from $226 in the second quarter to $217, and Bill Glaser, Sony Ericsson's finance director, told the Financial Times that the company's ASP probably will decline further in the fourth quarter. Sony Ericsson sales fell slightly to $2.26 billion, down from $2.28 billion in the third quarter of last year. Sony Ericsson said its market share remained unchanged sequentially at 4 percent.

"There are supply chain shortages on the market, and that has affected us," Sony Ericsson CEO Bert Nordberg told Reuters. "Our volume did not meet expectations. That is the one reason sticking out."

AT&T Mobility (NYSE:T) launched of the Xperia X10, the OEM's flagship Android device, in the quarter, and Sony Ericsson also began selling its Android phones in China. However, the vendor continues to ship phones with older versions of Android, and has struggled to update its portfolio to the latest version of Android, 2.2.

Sony Ericsson's Android phones run a customer user interface, called UX, which features two signature applications: Timescape and Mediascape. Timescape allows users to browse all of their communications with a contact--via photos, emails, texts, Facebook and Twitter--in one view. Mediscape allows users to manage various types of content from various sources.

For more:
- see this release
- see this WSJ article (sub. req.)
- see this Reuters article
- see this FT article
- see this Bloomberg article
- see this FierceWireless Q3 earnings page

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