Sony Ericsson profit boosted by Android handset

The mobile hardware maker has turned a profit for the second quarter in a row, boosted by Xperia sales and cost-cutting that saw thousands of job losses
Written by Ben Woods, Contributor

Sony Ericsson has shown a profit for the second quarter in a row, spurred by the launch of its Android-based Xperia X10 and cost-cutting moves that reduced its workforce by a third.

In its second-quarter financial results, released on Friday, the mobile hardware maker reported a net profit for the quarter of €12m (£10m), significantly better than the €213m loss posted a year previously and building on its return to profit showed in its first-quarter net income of €21m.

The company, a joint venture between Sony and Ericsson, achieved a modest increase in handsets shipped in comparison to the previous quarter, up from 10.5 million to 11 million, although the figure is a drop on the 13.8 million seen in the same period in 2009.

Sony Ericsson said its decision to place more emphasis on smartphone handsets contributed towards its continuing return to profit.

"Our second quarter results show that the company continued the momentum seen in the first quarter as a result of our focus on the value market and the success of new smartphones; Xperia X10 and Vivaz, launched during the first quarter. These models, along with the Xperia X10 Mini and Xperia X10 Mini Pro — which started shipping at the end of the second quarter — have been well received by operators," said Sony Ericsson president Bert Nordberg in a statement.

The company said its profit was boosted by an increase in the average selling price of handsets of 19.4 percent in the quarter, from €134 to €160.

Sony Ericsson also attributed ongoing cost-cutting exercises, which began in mid-2008, to its increase in profitability. So far, the measures have resulted in a reduction in worldwide workforce by more than one-third (approximately 4,000 people), leaving the global number of employees at around 7,800, it said.

These measures should result in a drop in annual operating costs of €880m by the end of the year, the company added.

A research report on the first-quarter mobile market published by Gartner in May 2010 showed that while global handset sales had increased by 17 percent, Sony Ericsson saw a drop in market share of 2.3 percent. During the same period, RIM's smartphone-only approach launched it into the top five worldwide handset manufacturer rankings for the first time, the market research firm said.

However, the Gartner report did note that Sony Ericsson's Android-based smartphones, such as the X10 and X10 Mini, launched late in the first quarter and therefore had little impact on figures earlier in 2010.

Sony Ericsson said in its earnings report that its second-quarter market share remained flat at an estimated 4 percent, but said it continued to expect to see "slight growth in units in the global handset market in 2010".

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