By Janina Pfalzer, Bloomberg
Stockholm: Sony Ericsson Mobile Communications, the world’s fourth-largest maker of mobile handsets, said profit more than doubled in the first quarter on sales of phones with digital cameras and music players that have higher margins.
Net income jumped to 254 million euros ($346 million) from 109 million euros a year earlier, the London-based company said in a statement today. Sales rose by 47 % to 2.93 billion euros as it sold 21.8 million phones in the quarter.
Sony Ericsson’s product line is dominated by more expensive phones such as the K800i that comes with a high-resolution camera and was the gadget of choice in the latest James Bond movie. That’s allowed the venture between Ericsson AB and Sony Corp. to command average selling prices on its handsets that are about a third higher than those of market leader Nokia Oyj.
“We have announced a number of exciting new products during the quarter, many of which are already shipping and have been well received by consumers,” Chief Executive Officer Miles Flint said in the statement.
The joint venture’s aim is to wrest the number three position in the industry from Samsung Electronics Co. To help reach that target, Sony Ericson last month teamed up with Sagem Communication of France to expand its range of cheaper phones.
The push into cheaper phones won’t hurt profitability, Flint said on 27 March. Instead, Sony Ericsson will seek to make features including the Walkman music-player phones more accessible to a wider range of consumers.
Nokia, Sony Ericsson’s Finnish competitor, yesterday reported an unchanged selling price of 89 euros per phone and said first-quarter profit fell by 6.6 % on increased sales of lower-priced handsets in China and India. Motorola, the industry’s No. 2, a day earlier reported a first-quarter net loss of after selling prices for its mobile phones fell.
Sony Ericsson’s average selling price fell to 134 euros in the quarter from 149 euros a year earlier and 146 euros the previous quarter. Pretax profit jumped to 362 million euros from 151 million euros a year earlier.
Analysts had predicted sales of 3.08 billion euros for the quarter on unit shipments of 22 million, a survey of 22 analysts by SME Direkt showed. Pretax profit was expected to be 368 million euros, and the average selling price was estimated to be 142 euros per phone, according to the poll.
Sony Ericsson estimates its market share climbed about 2 percentage points in the first quarter to more than 8 % from a year earlier. In the fourth quarter, Sony Ericsson estimated its market share was 9 %. Motorola predicted its market share declined almost six percentage points to 17.5 % from the fourth quarter while Nokia said its market share was unchanged at 36 %.
Total global handset sales are forecast to reach more than 1.1 billion units this year, Sony Ericsson predicted.