Sony Ericsson posts Q3 profit, warns of European slowdown

Sony Ericsson reported a profit for the third quarter on the back of higher smartphone sales, but CEO Bert Nordberg warned that ebbing consumer confidence amid Europe's debt crisis could impact the mobile industry. Additionally, Nordberg said starting in 2012 Sony Ericsson will shift all of its production to smartphones.

The company posted a net profit of $42.7 million in the quarter, down from a profit of $85.6 million in the year-ago quarter but up from a net loss of around $58 million in the second quarter when it was rocked by the effects of the earthquake in Japan.

In interviews, Nordberg warned though that weak consumer confidence 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." 

For now, Sony Ericsson appears to be keeping its head above water. The company's revenue clocked in at $2.19 billion, flat from the year-ago period. The company's reliance on Google's (NASDAQ:GOOG) Android platform continued to power its results, and the company shipped 9.5 million handsets in the quarter, up 25 percent sequentially due to higher smartphone sales but down 9 percent year-over-year due to weaker feature phone shipments. The company said that 80 percent of its sales were smartphones. 

Sony Ericsson's market share stood at 1.7 percent and its average selling price climbed to $229 from $212, due to a higher mix of smartphones.

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

There have been recent indications that Sony Ericsson is moving more toward a product alignment with Sony. The handset maker's Xperia Play Android phone is essentially a mobile Sony PlayStation device married to a phone, and has access to Sony's video game library. Additionally, Sony Ericsson's flagship Android phones, including the Xperia Arc, connect to Sony TVs through DLNA technology. 

For more:
- see this release
- see this WSJ article (sub. req.)
- see this Reuters article

Special Report: Wireless in the third quarter of 2011

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