Sony Ericsson predicts "modest growth" in 2011


Sony Ericsson has revealed lower-than-expected profit and sales during the final quarter of its financial results and has suggested that that handset market growth in 2011 will only be modest.

The poor performance contrasted sharply with smartphone rival Apple, whose results beat forecasts this week on strong sales of its iPhone and iPad.

Sony Ericsson, owned by Swedish company Ericsson and Japanese group Sony, made a Q4 pretax profit of 35 million on sales of 1.53 billion. Full-year figures stood at 189 million before taxes and other key charges (such as restructuring) - a marked difference from the 878 million loss in 2009.

Analysts in a Reuters poll had an average forecast for a pretax profit of 79.7 million and sales of 1.82 billion during the quarter.

One analyst said Sony Ericsson had not refreshed its top of the line, PC-like handset portfolio quickly enough last year to compete with more nimble rivals such as world number one Nokia or fast-growing firms such as Samsung.

"The competition is so tough you cannot afford not to refresh your portfolio," said Gartner analyst Carolina Milanesi.

Sony Ericsson chief rxecutive Bert Nordberg said the lack of new products had "somewhat constrained" shipments in the quarter. They totaled 11.2 million, up on the previous quarter but down 23 per cent on the same period in 2009.

"2010 was a turnaround year for Sony Ericsson. Our four consecutive quarters of profit reflect the success of our shift towards an Android-based smartphone portfolio," he said.

"We will celebrate the 10th anniversary of the creation of Sony Ericsson in 2011, and as shown by the recently announced Xperia arc, we will continue to focus on delivering the most entertaining smartphones worldwide."

The firm's average selling price (ASP) for the quarter was 136, down 12 per cent on the third quarter. Sony Ericsson said this was "mainly due to price erosion, foreign exchange and product mix."

Sony Ericsson said it expected "modest growth in units in the global handset market for 2011."

The company was ranked the fifth-biggest handset maker in an industry earlier this month but that did not include Blackberry maker Research In Motion, which has reported higher sales than Sony Ericsson in its latest period.

(Additional reporting by Tarmo Virki Reuters and IT PRO)


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