Sony Ericsson stuns market with a profit

Steve Dinneen
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SONY ERICSSON shocked the market yesterday by announcing a small profit despite hemorrhaging market share and having its supply chain rocked by the Japanese tsunami.

The firm was buoyed by surging demand for smartphones but missed analysts’ revenue forecasts by only shifting 8.1m units, giving it a lowly market share of just two per cent.

However it posted a pre-tax profit of €15m (£13m), beating an average analyst forecast for a loss of €24m.

Sony Ericsson has slashed costs – including cutting around 4,000 jobs – and refocused on higher margin smartphones that link to social networking sites like Facebook.

The share of smartphones in Sony Ericsson sales rose to 60 per cent from 40 per cent in the previous quarter.

But analysts say it still takes too long for the group to bring new products to market and it has been left trailing by the likes of Apple’s iPhone and smartphones from rivals such as Samsung and HTC.

Chief executive Bert Nordberg said: “The Japan earthquake made it a challenging quarter operationally and we are experiencing some disruptions to our supply chain.”

CCS Insight analyst Geoff Blaber said: “This is a challenging situation for Sony Ericsson, but with lowered operating expenses and continued improvement to gross margin, it is at least in a better position to weather the storm than it was 12 to 24 months ago.”