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Japan hit eyed in Sony Ericsson earnings report

Japan hit eyed in Sony Ericsson earnings report
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First Published: Tue, Apr 19 2011. 11 25 AM IST
Updated: Tue, Apr 19 2011. 11 25 AM IST
Stockholm/Helsinki: Cellphone venture Sony Ericsson is expected to shed light on the magnitude of the hit from Japan’s earthquake on the cellphone industry when it unveils its January-March earnings on Tuesday.
Sony Ericsson said in early April the 11 March quake, which hit component supplies for electronics firms around the globe, was limiting volumes in its new smartphone offerings and would delay the wider launch of its neo model to the third quarter.
Analysts said this makes 2011 another tough period for the 50-50 venture of Sony and Ericsson, which only returned to profit a year ago after seven straight quarters of losses.
Nokia, the world’s biggest handset vendor by volume, warned last month an industry-wide shortage of components and raw materials sourced from Japan would affect it, but said the impact on earnings would be limited.
Nokia’s January-March report is due on 21 April.
“All phonemakers will face problems,” said Francisco Jeronimo, analyst at IDC. “I am looking to understand how deep is the problem and how long will it take to overcome this.”
Sony Ericsson warned in January of a weak first quarter as it struggled to fill an awkward hole in its product portfolio, with old models losing appeal faster than the firm expected and new models only starting to help from the second quarter.
The venture is expected to report a pretax loss of €24 million ($34.4 million), against a profit of 18 million a year ago, as it has been forced to cut prices on its old models to maintain its market position.
Sony Ericsson has slashed costs and refocused on higher margin smartphones that link to social networking sites like Facebook. But analysts say it still takes too long for the group to bring new products to market and it has been left trailing by the likes of Apple’s iPhone and PC-like smartphones from the likes of Samsung and HTC.
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First Published: Tue, Apr 19 2011. 11 25 AM IST