Earnings reports

Sony Ericsson Ramps Its ASP

After a woeful few years of declining sales and market share, accompanied by deep losses, things are looking brighter for beleaguered mobile device vendor Sony Ericsson Mobile Communications , which today reported its second-quarter results. (See Device Depression for Nokia, Sony Ericsson and Sony Ericsson Issues Profit Warning.)

Proving that its first-quarter revival wasn't just a blip, the company has now reported two consecutive quarters of net profit. (See Sony Ericsson Reports Q2 and Sony Ericsson's Transformation Takes Shape.)

And while its volume shipments are lower than a year ago, the vendor has a much healthier gross margin, is generating operating profits, and has seen its average selling price increase by more than 31 percent compared with a year ago (and increase by more than 19 percent sequentially) to €160 (US$207.63).

Table 1: Sony Ericsson Q2 2010
Q2 2009 Q1 2010 Q2 2010 YoY change
Units shipped (millions) 13.8 10.5 11.0 -20%
Revenues (millions of euros) 1,684 1,405 1,757 4%
Gross margin 12% 31% 28% Increase of 16 percentage points
Operating income (millions of euros) -274 20 36 --
Net income (millions of euros) -213 21 12 --
Average selling price (ASP, in euros) 122 134 160 31%
Source: Sony Ericsson

"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," stated the firm's president, Bert Nordberg in the company's quarterly earnings statement. "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 and we are now well positioned for long term growth."

The turnaround in financial fortunes is due not only to the vendor's more targeted marketing, but also to a deep cost-cutting program that has seen the company shed 4,000 jobs in the past two years to end last month with 7,800 employees. (See Sony Ericsson Cuts Jobs.)

Having helped keep the company afloat, Nordberg now needs to find a way to boost Sony Ericsson's market share beyond its current estimated 4 percent.

For comparison, market leader Nokia Corp. (NYSE: NOK) had a market share of around 35 percent in the first quarter of 2010, followed by Samsung Corp. with about 21 percent, and LG Electronics Inc. (London: LGLD; Korea: 6657.KS) with around 9 percent, according to Gartner Inc. . Sony Ericsson managed a market share of just 3.1 percent in the first quarter, putting it in fifth spot, just behind BlackBerry . (See Gartner: RIM, Android See Boosts in Q1.)

— Ray Le Maistre, International Managing Editor, Light Reading

digits 12/5/2012 | 4:29:45 PM
re: Sony Ericsson Ramps Its ASP

From a pretty desperate situation two years ago, that's quite the turnaround success. The downside, of course, is that 4,000 people lost their jobs.... 

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