Sony Ericsson's last financial results before the joint venture ends have shown massive losses in its last quarter, largely due to plummeting feature-phone sales.
Sony Ericsson lost €247m in 2011, although its Xperia line of smartphones saw a 65-percent year-on-year increase in sales. Photo credit: Stephen Shankland/CNET News
The London-based mobile device maker's results for the fourth quarter of 2011 and the full year,
released on Thursday, revealed a 20-percent year-on-year drop in
overall shipments. Added to component
shortages due to the Thai floods, and significant restructuring
costs ahead of Sony's
buyout of the partnership with Ericsson, this led to net losses
of €247m (£206m) for the year of 2011 and €207m (£173m) for the final
The losses are reminiscent of those Sony Ericsson was making
three years ago when it was on the brink of extinction, before
Android helped it back to profitability. In 2010, the company made
profits of €90m, but that reflected sales revenue of €6.3bn — in
2011, that revenue was down to €5.2bn.
"Our fourth-quarter results reflected intense competition,
unfavourable macroeconomic conditions and the effects of a natural
disaster in Thailand this quarter," Sony Ericsson chief Bert Nordberg
said in a statement. "We are aligning our business to drive
profitability and to meet customer needs."
Sony Ericsson's fourth quarter was particularly "tough in Europe, where Samsung and Apple dominated", Gartner analyst Carolina Milanesi said in a post to Twitter. She added it is "interesting" that it cited the Thai disaster as it was mostly PC vendors that had been affected by the floods.
Nordberg pointed out that throughout 2011, Sony Ericsson was in
the process of switching
to a smartphone-only strategy. The poor overall sales results may
have shown a huge drop in feature-phone sales, but sales of
Android-based smartphones in the fourth quarter actually
showed a 65-percent year-on-year boost.
Sony Ericsson has sold 28 million Xperia handsets to date, the
company said, and the Android smartphone line represented 80 percent
of sales during the fourth quarter. The manufacturer estimates it has a 10-percent share of the global Android
smartphone market, which increased in size by 60 percent during
Ian Fogg, head of mobile at IHS Screen Digest, noted it is "sobering that five years after the iPhone announcement, the established handset [manufacturers] are still struggling to compete".
The restructuring charges for the full year, which all came in the fourth
quarter ahead of Sony's €1bn buyout of the joint venture with
Ericsson, totalled €93m. Without taking those costs into account,
pre-tax losses were only €150m for the year and €154m for the
The takeover by Sony will take effect at the end of January or in early
February, the company said.
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