Earnings reports

Sony Ericsson's Mixed Bag

The third quarter of 2010 was a mix of sweet and sour for device manufacturer Sony Ericsson Mobile Communications , which stressed its ongoing return to profitability but failed to boost volume sales or its average selling price on a sequential basis.

The good news for the firm is that it reported its third consecutive quarter of net profit, at €49 million (US$69 million) from revenues of €1.6 billion ($2.25 billion), and that its average selling price (ASP) is much higher than a year ago. That's because the handset firm is now focused on its high-end, higher-margin smartphone devices (which now account for half the company's shipments) rather than high-volume, low-end, lower-margin products.

As a result, the vendor's gross and operating margins, its profitability, and its ASP are all better than a year ago, and the company believes it's clinging on to its global market share of around 4 percent.

Table 1: Sony Ericsson Q3 2010
Q3 2009 Q2 2010 Q3 2010 YoY change
Units shipped (millions) 14.1 11 10.4 -26%
Revenues (millions of euros) 1,619 1,757 1,603 Flat
Gross margin 16% 28% 30% Increase of 14 percentage points
Operating income (millions of euros) -193 36 63 --
Net income (millions of euros) -164 12 49 --
Average selling price (ASP, in euros) 114 160 154 34%
Source: Sony Ericsson

That's all very sweet -- but then there's the sour.

Revenues, device volume sales, and the ASP all slipped in the third quarter compared with the second quarter. (See Sony Ericsson Ramps Its ASP.)

That left investors with the jitters: Parent company Ericsson AB (Nasdaq: ERIC) saw its share price dip by 1.6 percent to 71 Swedish Kronor on the Stockholm exchange Friday morning.

— Ray Le Maistre, International Managing Editor, Light Reading

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