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22 January 2010

Q4 Highlights:Improved quarterly financial results reflected success of refreshed portfolio Transformation programme bearing fruit and to continue Announced first Android-based phone, the XPERIA™ X10The consolidated financial summary for Sony Ericsson Mobile Communications AB (Sony Ericsson) for the fourth quarter and full year ended December 31, 2009 is as follows:



Bert Nordberg, President, Sony Ericsson comments; “The refreshed portfolio, coupled with the business transformation programme has started to positively impact our financial results. Continued cost saving activities and resource realignment are necessary in order to build a leaner, more efficient organisation capable of meeting the demands of the changing competitive landscape. We will continue to focus on returning the company to profitability by establishing Sony Ericsson as the communication entertainment brand based on an exciting portfolio of mid- and high-end products, such as our recently announced Android-based phone, the XPERIA™ X10. 2010 will still be challenging as the full benefit of cost improvements will not impact results until the second half of the year, however we are confident that our business is on the right track.”

Units shipped in the quarter were 14.6 million, a sequential increase of 3% and a year-on-year decrease of 40%. Sales for the quarter were Euro 1,750 million, a sequential increase of 8% and a year-on-year decrease of 40%. The sequential increase was driven by market seasonality and successful sales of Satio™ and Aino™ phones. The year-on-year decrease in both units and sales was mainly due to a downturn in the global handset market and a faster than anticipated shift to touch screen phones in the mid-priced sector of the market. Average Selling Price (ASP) for the quarter rose sequentially by 5% to Euro 120 due to a more favourable product mix.

Gross margin percentage improved sequentially and year-on-year mainly driven by the successful sales of new, higher-margin phones as well as the positive impact of cost reduction activities.

Income before taxes for the quarter, excluding restructuring charges, was a loss of Euro 40 million compared to a loss of Euro 198 million in the previous quarter. The reduced loss was due to the improved gross margin and the benefits of reduced operating expenses. Excluding restructuring charges, Sony Ericsson made a loss for the full year 2009 of Euro 878 million compared with an income of Euro 92 million in 2008. The year-on-year deterioration was mainly attributable to the lower sales.

As of December 31, 2009, Sony Ericsson had a net cash position of Euro 620 million.

During 2009, Sony Ericsson secured external funding of Euro 455 million to strengthen the balance sheet and improve liquidity, out of which Euro 350 million has been guaranteed by the parent companies on a 50/50 basis. Euro 255 million was drawn by the end of 2009, but the remaining Euro 200 million, a two-year committed back-up facility, has not been utilised.

The programme started in mid-2008 to reduce annual operating expenses by Euro 880 million is continuing; with the full benefit expected during the second half of 2010. Since the start of the programme Sony Ericsson has reduced its global workforce by approximately 2,500 people to 9,100 by the end of 2009. The total restructuring charges taken to date are Euro 339 million, and charges for the full programme are estimated to be well within the previously announced Euro 500 million.

Sony Ericsson estimates that the global handset market in units for the fourth quarter 2009 was flat year-on-year and that its market share was about 5% in the fourth quarter. Sony Ericsson believes that the global handset market for the full year 2009 decreased in volume by around 8% year-on-year to around 1.1 billion units and that its market share in units for the full year 2009 was about 5%.

Sony Ericsson forecasts a slight growth in units in the global handset market in 2010.

http://www.sonyericsson.com/c[....]easefinal-20100122?cc=gb&lc=en
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Posted: 2010-01-22 09:35:27
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Really happy fr SE. Loss has come to 40 million Euros. If the x10 and the vivaz had launched in feb, i am sure the could have rubbed off the loss this quarter itself.
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Posted: 2010-01-22 09:57:47
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I expected this loss. Now, for the interesting part, this first quarter of 2010 they should at least break even or make a slight profit. Hopefully, Q2 will result in a profit of some sort.
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Posted: 2010-01-22 10:20:25
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Well it looks like the worst is over. They did say that they didn't expect to return to profit until late 2010.

Q2 should see the latest Symbian phones and the X10 selling like hot cakes so Q2 results will be much better. I can't see Q1 results being much different at the moment as a lot is still riding on Satio and Aino and the W995 and Q1 is traditionally a quiet quarter.
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Posted: 2010-01-22 10:24:57
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@goldenface

I agree to a certain extent but Satio and Aino still have a lot to offer after their bad reputations due to software issues. Now that everything has settled and more people seem to be having a less torrid time with them means more people will be interested in them. Also they haven't been in the market for that long to have reached their plateau. Yes, it may be a quiter quarter but not completely dead and hopeless. Price drops also will come into effect.

Also the 'greenheart' portfolio should supplement the high end. Obviously the other phones helped them to bring the loss to around ?40 million.

The star of the show (W995) should keep the momentum going for a short while. For me the worst case scenario would be a very small loss this quarter with the best scenario being a very small profit. I'll settle for a break even still.


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Posted: 2010-01-22 11:01:56
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Quite nice results, though I don't see it happening that they will make profit before Q3. W995 will keep selling for a while, while I don't see Satio and Aino being succesfull very long anymore actually. Really nice though that they managed to cut the loss by 100 million. The higher gross margin is positive too
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Posted: 2010-01-22 11:59:32
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I look at it this way- as long as there are not too many 12mp camera phones the Satio has a very decent chance of making more money. Apart from the Pixon the Satio is the only one and marketed as a multimedia phone helps a great deal. When it drops in price it becomes even more of a bargain that is hard to resist. The Aino on the other hand, even though it is following in the footsteps of Samsung and LG in design, has a real chance of making money when further price cuts are in place. It looks good and slightly different to Samsung or LG's somewhat similar devices in that full screen with no buttons.

The added bonus with Aino is its superb music quality, I still say the best sounding cellphone available.

I'm probably being too optimistic when in my predictions but the end of Q1 is just around the corner and all will be revealed.
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Posted: 2010-01-22 12:36:32
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Looking good
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Posted: 2010-01-22 12:44:04
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SE's efforts are almost paying off. They are really pushing the Satio and Aino down here,cant go a day without seeing an ad of theirs lately.
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Posted: 2010-01-22 12:55:22
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You chaps are obviously living in a 'dream world'. SE today is only 60% then what it was a year ago ! That's like almost half Furthermore, SE's name has become a trade mark for bad quality. Who the hell wants to be seen with a SE this days? Their market share has dropped accordingly. They are basicaly on life support. For such a small company they have somehow managed to turn over a billion usd to dust during 2009. They are still around only because Sony wants to keep a cell branch. Ericsson is so fed up. Has no choice though but to honor the contract with Sony. Nokia, Samsung etc etc , does not even bother with SE, Alcatel etc. I wonder if SE will ever make back all the losses, never mind the interest
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Posted: 2010-01-22 13:00:07
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