Sony Ericsson is showing that indeed handset joint ventures do work--even if it takes four years. The mobile phone maker said fourth-quarter net profit almost tripled from the previous year, boosted by the launch of Walkman-branded music phones. Sony Ericsson said it sold about 16.1 million handsets in the fourth quarter, up 28 percent from 2004. For all of 2005, it sold 51.1 million handsets. The company also gained a greater share of markets where cheaper handsets are in demand.
It's been a tough road for Sony Ericsson. When the two companies announced their pact in early 2001, analysts were quite skeptical. No other joint venture of this kind had been successful, primarily because of culture clashes and the cut-throat pricing involved in the handset business that puts a strain on margins. Investors at that time were hoping Ericsson would just exit the handset business as its sales continued to fall. Sony had continually failed to develop a successful handset business despite being the leader in consumer electronics. In 2003, Ericsson nearly bowed out of the joint venture because of weak sales as investors pressured the company to dramatically improve profitability.
For more information about Sony Ericsson's fourth-quarter results:
- check out this article from The Wall Street Journal (sub. req.)