News Forum Phone database

> New Topic
> Reply
< Esato Forum Index > Sony Ericsson / Sony > General > company profits fall 10% year-on-year Bookmark topic

@Dogmann

Nokia has an avarage price of 90 EUR (reported in Q2) while SE has 118 EUR (reported in Q3). With this I would not say the Nokias profitability comes from selling more expencive phones, but rather from selling larger volumes of low and mid end phones.

Either you sell 10 phones for 100 USD and earn 1000 or you sell 100 phones for 10 USD and earn equal amount of money, but gets a bigger market share at the same time.

Nokia went through this process of finding a good balance between low, mid and high end phones long time ago while SE has just started (their range of phones has been pretty slim previous years). Whether SE will succeed or fail remains to be seen in following quarters.

Cheers,
Arne


[ This Message was edited by: Arne Anka on 2007-10-15 19:11 ]
--
Posted: 2007-10-15 20:09:48
Edit : Quote


@Arne Anka

Well by your calculations then SE should still be making money then shouldn't they as they have increased and targeted the low to mid range market. So how come their profits just dropped 10% then? as by what you are saying they should still be making larger not smaller profits. Premium devices generate greater profits and you only need to sell a smaller amount to generate the same or greater profit.

So imagine just how much profit Nokia have generated with the N95 a premium device selling over 1.5 million units large volumes for a premium device, wouldn't you say. Especially as it still continues to sell well after the last figures were announced and of course continues to generate profit. You can not seriously be suggesting that Nokia's that sell for 90 Euros are responsible for more profit then premium devices selling for 3-400 Euros or even more are you?

Marc

_________________
Nokia E61, 2gb Sandisk, Fring, Tom Tom 6


Honoured to have won BEST DEBATER

[ This Message was edited by: Dogmann on 2007-10-15 19:46 ]
--
Posted: 2007-10-15 20:43:56
Edit : Quote


Dogmann you don't seem to have a very good grasp of Business principles?

The drop of profit margin could easily be accounted for by an increased spending on production, which will be paid for later by increased sales.

I may or may not be correct in this particular case, time will tell, but the principle I'm arguing from is a sound business practice.
--
Posted: 2007-10-16 01:59:49
Edit : Quote


@max You are completely wrong ! The profit is counted BEFORE and not after ! ! ! That's pretty basic buddy A company looks at how much money they have made (profit) and then they decide what to do with it (expand, invest in R&D etc etc) , not the other way around ! (as you suggest) Go and ask your economics teacher to give your money back On the other hand SE had a very strong profit growth for the last year and a 10% drop can be absorbed. They must not make a habit of it thou. Obviously is NOT good news from a economical point of view !
--
Posted: 2007-10-16 02:22:00
Edit : Quote


wheter anyone knows business principles or not, SE need a wake up call. If anything, they need to loose more so they will stop producing uninnovative phones with rehash designs. Their standards have got really poor since the K750 IMO.
--
Posted: 2007-10-16 02:33:08
Edit : Quote



So what you are saying a company never invests in production unless it has made a profit first?? Where might that profit come from in the first place then??

Regardless, 10% is neither here nor there. So what SE have dropped 10% in profits? They are still making a profit, just not as much as last quarter.

You and Dogmann jump up and down and make out I'm bending the laws of physics just to support SE, yet you guys are the one's who are jumping for joy over a measly drop in profits over one quarter, claiming it's a bad bad thing for SE, with big grins on your faces.

Contain yourselves guys, SE ain't dead yet, as much as you would like that.

_________________
File System Tweaks for the K750 K750 Tricks
K800 Tips and Themes
Max's K800 Page

[ This Message was edited by: max_wedge on 2007-10-16 01:59 ]
--
Posted: 2007-10-16 02:54:21
Edit : Quote


On one hand SE is lambasted for making huge profits which some profess is at the expense of material and build quality, but then any fall in profits - no matter how small, is a great omen of doom. It seems they can't win no matter what they do.

The truth is profits will shrink as soon as cheaper handsets begin to be produced as there is less profit to be made on each one, especially when you take into account the inevitable price drop each model undertakes just a few weeks after release.

Different analysts interpret the quarterly figures differently so you can basically read into them whatever you choose, but to expect profits to increase after moving into lower value handsets is expecting a bit much IMO.
--
Posted: 2007-10-16 13:49:52
Edit : Quote



Profit per unit is reduced therefore profit margin is reduced, but due to increased sales, overall profit is increased (assuming you can maintain high volumes of mid-range handset sales)

Any volume business makes more money be reducing price (and margin) per unit and selling high volumes of the unit. Supermarkets, petrol retailers etc work on this principle. Even Nokia apply this principle to their mid-range.
--
Posted: 2007-10-16 14:03:03
Edit : Quote


@Max Wedge,

Sorry i can't see any where that i am rejoicing in the fact SE have had a drop in profits, it really is quite amazeing that drawing any attention to any shortcoming of SE gets you labelled as someone that wants to see SE be destroyed completely illogical IMO. Complacency and acceptance is what is dangerous to the future of SE not constructive criticism but a lack of it.


All i have said as is my belief is that they need to start producing great and innovative premium devices once more, i also believe this is where there is far more profit to be made premium devices produce a higher profit per unit. Which in turn earns the company a greater market presence which should result in greater sales. SE has never had a huge range of premium devices but their kudos worked all the way down the range and their flagship devices attracted customers even if they didn't purchase these premium devices.

Ericsson and SE used to lead the way and others used to follow what they did unfortunately this is no longer the case but needs to be yet again IMO then you will see real growth in both market share and profits. Middle of the road devices means SE will become and remain a middle of the road player which is not the position it should hold.

Hopefully the new CEO will address many of these issues and SE's future will once more be a bright and exciting one like it used to be and should be.


Marc




_________________
Nokia E61, 2gb Sandisk, Fring, Tom Tom 6


Honoured to have won BEST DEBATER

[ This Message was edited by: Dogmann on 2007-10-16 13:35 ]
--
Posted: 2007-10-16 14:34:41
Edit : Quote


@Dog Don't even bother to answer him - you waste your time. On another note - did you check Ericsson's share price yeasterday . Huh, I still have a couple of those - not many thou. SE should have been just fine this year if it wasn't for the Ericsson 'pay back' in January - How much was that again? 300mil USD or something like that?!?! They looked 'invincible' by then - but after this knock . . . And to make matters even worse - Ericsson needs now more money then ever. If Nokia get 40% market share after tomorrow's announcement, I will sell all the Ericsson shares (well, what's left of them) and buy Nokia's. I hope I don't make a mistake -
--
Posted: 2007-10-17 18:23:09
Edit : Quote

---

New Topic   Reply

Forum Index