Sony Ericsson turnaround continues with Q2 numbers

Handset vendor Sony Ericsson achieved its second consecutive profitable quarter, posting net income of €12m for the Q2 2010. In the same quarter last year the firm made a loss of €213m, while in Q1 2010 the firm recorded net profit of €21m. Revenues were also up, at €1.76bn, compared to €1.68bn for Q209 and €1.4bn for Q1 this year.

The results reflect a stronger performance from the Swedish-Japanese joint venture at the higher end of the market. Unit sales were down year on year from 13.8 million to 11 million (up sequentially from 10.5 million) but average selling price was up 31 per cent on Q109 to €160.  Gross margin more than doubled over the same period to 28 per cent, but was down three per cent on the first quarter of 2010. Sony Ericsson said the drop in unit shipments reflected a cull in the firm’s product portfolio.

Company president Bert Nordberg said: “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 an the success of new smartphones.”

He highlighted the Xperia X10 and Vivaz, which the firm launched in the first quarter, as well as the X10 mini and mini pro, which started shipping at the end of the second quarter. These phones “have been well received by operators,” he said, adding: “we are now well positioned for long term growth.”

After a period in the wilderness, during which the firm floundered at the high end of the handset market, Sony Ericsson appears to have regained a sense of purpose. A cost cutting programme initiated by the firm two years ago is now nearing its conclusion and is on target, the firm said, to reduce annual operating expenses by €880m by the end of 2010. Since the programme was begun, Sony Ericsson’s global headcount has been reduced by 4,000, leaving a workforce of 7,800 at the close of the second quarter. Restructuring charges have reached €374m to date.

Sony Ericsson said that it estimated its market share had remained flat during the quarter, at four per cent. The latest rankings from Gartner put Sony Ericsson in fifth place in the global handset market, behind Nokia, Samsung, LG and Blackberry manufacturer Research in Motion.