Sony Ericsson's results were ahead of market expectations and point the way towards a more positive year from the company, which suffered during the economic turn down last year.
The improved results, in part, reflect Sony Ericsson's strategic shift from a focus on features phones to a focus on high end products (mainly smartphones). This process is still under way and was spear headed by its product announcements late last year and early this year. Further product announcement are expected in the second half of this year in order to strengthen the portfolio for the Q4 market, where handset sales are traditionally at their highest.
Sony Ericsson's current focus is on Android (as reflected in its announced portfolio), but it will not be abandoning other platforms, believing it can create value by building on the top, regardless of the platform being used.
Key highlights
- Return to profitability, €21 million net profit from sales of €1.4 billion. Up from - €293 million loss from sales of €1.7 billion in Q1 2009.
- Average selling price of €134 (up from €120 in Q1 2009), reflecting a greater proportion of high-end handsets in Sony Ericsson's portfolio.
- Unit shipments of 10.5 million, down from 14.5 million in Q1 2009.
- Sony Ericsson's 'business transformation programme' (cost cutting) has helped improve the companies results. The programme aims to cut €800 million of costs, but the full impact will not be felt until the second half of 2010. Sony Ericsson has cut its number of employees by 3,150 to 8,450.
- The Sony Ericsson Vivaz and Sony Ericsson Xperia X10 'have been well received by global customers'. Sony Ericsson will bringing a number of additional smartphones to the market this quarter including the Vivaz Pro, X10 Mini and X10 Mini Pro. The Symbian powered Sony Ericsson Satio has also had 'strong sell through'.
From the press release:
Bert Nordberg, President, Sony Ericsson commented, “We are pleased to see the positive impact of both the launch of new products and the business transformation programme improving the company’s results. The Xperia™ X10, our first android-based Communication Entertainment device featuring signature Sony Ericsson applications Timescape and Mediascape™, and Vivaz™, a beautifully designed, touch-screen Symbian phone started shipping towards the end of the quarter. Both models have been well received by global customers.” He added, “Increases in both gross and operating margins show that we are on the right track to build the correct cost structure for our business organization and strategy. We will continue to work through the transformation programme to ensure that we are competitive.”