Sony Ericsson Mobile Communications AB, a joint venture between Sony Corp. (SNE, SON.L) and LM Ericsson Telephone Co. (ERIC), Thursday reported a profit for the fourth quarter, as lower costs and a shift of focus to Android-based smartphone portfolio offset a drop in sales.
Net income in the quarter totaled EUR 8 million or $10.7 million, compared to a net loss of EUR 167 million last year, and was lower than net income of EUR 49 million in the preceding quarter.
Net sales declined 13 percent to EUR 1.53 billion from EUR 1.75 billion in the year-ago quarter with decreases reported across all regions, especially in Europe, Middle east & Africa and were lower than EUR 1.603 billion reported in the third quarter.
Operating income was EUR 39 million, in comparison with an operating loss of EUR 181 million in the prior year.
Gross margin improved to 30 percent from 23 percent, as cost of sales dropped 20 percent from last year to EUR 1.07 billion. Total operating expenses dropped 29 percent.
The number of units shipped dropped 23 percent to 11.2 million in the quarter, owing to streamlining of the portfolio to focus on higher-end smartphones. Average selling price for the quarter was EUR 136, up 13% from last year.
Handset makers are making a shift to smartphones as more customers seek additional features and the device generates more margins. Apple Inc. (AAPL) Tuesday said its first-quarter profit jumped 78% from last year. Steve Jobs, Apple's CEO, said, "We had a phenomenal holiday quarter with record Mac, iPhone and iPad sales. We are firing on all cylinders and we've got some exciting things in the pipeline for this year including iPhone 4 on Verizon which customers can't wait to get their hands on."
For the full year, Sony reported net income of EUR 90 million, compared to a net loss of EUR 836 million in 2009. Sales slipped 7 percent to EUR 6.294 billion.
Bert Nordberg, President & CEO of Sony Ericsson commented, "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."
Sony Ericsson estimates that the global handset market for the full year 2010 increased slightly in volume to almost 1.2 billion units.
According to the company, the global handset market in the quarter was essentially flat and its market share was about 3% in units and around 5% in value.
Projecting that the global handset market in 2010 increased slightly in volume to almost 1.2 billion units, Sony Ericsson estimates that its market share in 2010 was about 4% in units and around 6% in value.
The company forecasts modest growth in units in the global handset market for 2011.
Sony closed in Tokyo at 2,936 yen, down 32 yen from the previous close.
Ericsson is currently trading in Stockholm at SEK 72.95, down 1.48%.
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