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Continuing strong momentum at Sony Ericsson
11 October 2007

Q3 Highlights:

Year-on-year volume growth of 31%
Continued volume growth driven by profitable lower priced phones
Good market reaction to new slider form-factor of W580 Walkman® phone
Successful launch of Sony Ericsson P1 smartphone


The consolidated financial summary for Sony Ericsson Mobile Communications AB (Sony Ericsson) for the third quarter ended September 30, 2007 is as follows:


Q3 2006
Q2 2007
Q3 2007

Number of units shipped (million)
19.8
24.9
25.9

Sales (Euro m.)
2,913
3,112
3,108

Gross Margin %
31.5%
29.6%
30.7%

Operating Income (Euro m.)
427
315
393

Operating Income %
14.6%
10.1%
12.7%

Income Before Taxes (Euro m.)
433
327
384

Net income (Euro m.)
298
220
267

Average Sales Price (Euro)
147
120
120


Units shipped in the quarter reached approximately 26 million, a 31% increase compared to the same period last year. Sales for the quarter were Euro 3,108 million, representing a year-on-year increase of 7%. Income before taxes for the quarter was Euro 384 million, representing a year-on-year decrease of 11%, which reflects the exceptional third quarter the company experienced in 2006. Net income for the quarter was Euro 267 million. In line with Sony Ericsson expectations, the increase in low- and mid-tier priced phones in the product portfolio in the third quarter resulted in a decline in Average Selling Price (ASP) to Euro 120.


“““The quarter has seen Sony Ericsson continue to generate significant year-on-year volume growth with a portfolio of products spread across the widest variety of price points in the company’s history. Low- and mid-tier priced models such as the W200 Walkman® phone and simple ‘talk and text’ range of phones have been key volume drivers during the quarter, while the high-spec P1 smartphone and W580 slider Walkman® phone have been well received and strengthen the portfolio at the higher-end,” said Miles Flint, President of Sony Ericsson. “We are confident that the remainder of the year will see us further capitalize on this new broader portfolio with flag-ship Walkman® phone models such as the W910 and W960 plus the much anticipated 5 mega-pixel Cyber-shot™ K850 camera phone launching in time for the holiday season.””


During the quarter Sony Ericsson strengthened its position in North America and Latin America as well as Western Europe due to well accepted Walkman® and Cyber-shot™ phones. Previously announced activities to further strengthen the overall portfolio such as manufacturing and R&D activities in India, plus an R&D licensing agreement with Sagem continue to progress as planned.

Sony Ericsson forecasts that the 2007 global handset market will be above 1.1 billion units. The company gained around 1% of market share compared with the same period last year and finished the third quarter at over 9%.

As communicated at the beginning of the year, a capital redemption of total Euro 300 million was paid to the parent companies in the quarter.

During the quarter Sony Ericsson announced that the company’s president Miles Flint will step down as of November 1st 2007. Effective 1st November Hideki ‘Dick’ Komiyama, currently Director, Chairman, Sony Electronics Inc., USA, and EVP Electronics Marketing and Sales Strategies, Sony Corporation, Japan, will succeed Miles Flint, who will remain as Executive Advisor to Dick Komiyama until the end of December 2007. Dick Komiyama will be based at Sony Ericsson’s offices in London.

Invoices from Ericsson amounted to Euro 152 million in the quarter, which was offset from the advance payment made by Sony Ericsson to Ericsson in the first quarter of 2007.


WALKMAN® and Cyber-shot™ are trademarks or registered trademarks of Sony Corporation.

[ This Message was edited by: goldenface on 2007-10-11 08:10 ]
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Posted: 2007-10-11 09:07:45
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Maybe now that mass-market sales are good we get to see some high-end phones :]

Positive report form
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Posted: 2007-10-11 09:21:51
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2nd UPDATE: Sony Ericsson 3Q Profit -10%, Margins Strong

LONDON -(Dow Jones)- Sony Ericsson, the world's fourth largest mobile phone operator Thursday saw third quarter net profit drop 10% to EUR267 million, but increased device shipments by 31%, after it extended its push into fast-growth emerging markets.

The company, a joint venture between Ericsson (ERIC) and Sony Corp. (SNE) - which over the last few quarters has been pushing ahead with making lower end phones to target markets such as Latin America and India - saw mobile phone shipments grow to 25.9 million in the quarter from 19.8 million the previous year.

The London-headquartered company reported revenues for the three months ending Sept. 30, up 7% to EUR3.11 billion from EUR2.913 billion, but missed analyst forecasts on sales and volumes. Sony Ericsson said exceptional third-quarter result in 2006 may have also skewed growth rates during this period.

However, the average selling price of Sony Ericsson devices fell to EUR120 from EUR147 per handset, as the company began to target highly populated regions where disposable income is lower.

Faced with stiffer competition in its core business, where it makes high and mid-tier Walkman music and Cybershot camera phones, Sony Ericsson has been extending its operations to make cheaper, simpler handsets in order to take a greater share of the low-end market. Nokia's recent push into online music sales and Apple Inc.'s (AAPL) iPhone are challenging Sony Ericsson's dominance in the Western music-phone market.

Despite the "mixed-bag" of results, Nomura analyst Richard Windsor said that Sony Ericsson's profitability was excellent, with its 12.7% operating income coming in far ahead of industry consensus.

"This is an excellent development for Sony Ericsson in our view as it has shown that it can keep margins high as it chips away at progressively lower market tiers," he said.

Outgoing Sony Ericsson President and Chief Executive Miles Flint said he was confident that the company would capitalize on the lucrative Christmas trading period through its broadening range of phones.

The company slightly edged up its forecast for the global handset market, saying that more than 1.1 billion units will be sold during 2007.

Sony Ericsson also said that it had gained ground during the quarter, taking 1% market share year-on-year, giving it over 9% of the global mobile phone market. The company, alongside rivals Nokia Corp (NOK) and Samsung (005930.SE), have benefitted over the last few quarters from a poor performance by North American handset giant Motorola Inc (MOT).

Flint, who is credited with transforming the Sony Ericsson business, will be replaced by Sony Corp veteran Hideki 'Dick' Komiyama on Nov. 1.

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Posted: 2007-10-11 12:13:38
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