Sony Ericsson reports third quarter 2010 results

Q3 Highlights:

Turnaround continues with third consecutive quarter of profits
Continued success of smartphone portfolio keeps ASP at high level
Launch of Xperia™ models in new markets, including China and the U.S.

The consolidated financial summary for Sony Ericsson Mobile Communications AB (Sony Ericsson) for the third quarter ended September 30, 2010 is as follows:





Q3 2009


Q2 2010


Q3 2010

Number of units shipped (million)


14.1


11.0


10.4

Sales (Euro m.)


1,619


1,757


1,603

Gross margin (%)


16%


28%


30%

Operating income (Euro m.)


-193


36


63

Operating margin (%)


-12%


2%


4%

Restructuring charges (Euro m.)


2


32


4

Operating income excl. restructuring charges (Euro m.)


-191


68


67

Operating margin excl. restructuring charges (%)


-12%


4%


4%

Income before taxes (IBT) (Euro m.)


-199


31


62

IBT excl. restructuring charges (Euro m.)


-198


63


66

Net income (Euro m.)


-164


12


49












Average selling price (Euro)


114


160


154



Bert Nordberg, President & CEO of Sony Ericsson commented, “Our third consecutive quarter of profitable results illustrates that Sony Ericsson’s overall performance is stabilising. Our strategy to focus on the smartphone segment is succeeding and smartphones now comprise more than 50% of our total sales. During the quarter, we launched our Android-based Xperia™ models in new markets, such as China and the U.S., and it is our ambition to become the global number one handset provider on the Android platform.”

Income before taxes for the quarter excluding restructuring charges was a profit of Euro 66 million following the positive effects of the transformation programme. Net income for the quarter was Euro 49 million, an increase of Euro 213 million year-on-year and of Euro 37 million sequentially.

The gross margin percentage was 30% and almost doubled year-on-year, reflective of the company turnaround.

Units shipped in the quarter were 10.4 million, a decrease of 26% year-on-year and down 5% sequentially. Average selling price (ASP) in the quarter remained at a high level of Euro 154, a 34% increase year-on-year and a decrease of 4% sequentially, due to product and geographical mix. As a result, sales for the quarter were Euro 1,603 million, essentially flat year-on-year and a 9% decrease sequentially.

Sony Ericsson’s net cash position as of September 30, 2010 was Euro 538 million. The negative cash flow from operating activities was Euro 54 million, mainly due to payments during the quarter related to the transformation programme.

Market share in unit base for the quarter remained flat sequentially and is estimated to be approximately 4%. The value market share is estimated to be approximately 6%.

Sony Ericsson maintains a forecast of slight growth in units in the global handset market in 2010.

The liquid identity is a registered trademark of Sony Ericsson Mobile Communications AB. Xperia™ is a trademark of Sony Ericsson Mobile Communications AB. Sony is a registered trademark of Sony Corporation. Ericsson is a registered trademark of Telefonaktiebolaget LM Ericsson. Any rights not expressly granted herein are reserved and subject to change without prior notice.

EDITOR’S NOTES:

Financial statements and additional information:

Financial statements:
Consolidated income statement
Consolidated income statement – isolated quarters
Consolidated balance sheet
Consolidated statement of cash flows
Consolidated statement of cash flows – isolated quarters
Net sales by market area by quarter

Sony Ericsson is a 50:50 joint venture by Sony and Ericsson established in October 2001, with global corporate functions located in London and operations in all major markets. Sony Ericsson’s vision is to become the industry leader in Communication Entertainment; where new styles of communicating through the internet and social media, become entertainment. Sony Ericsson offers exciting consumer experiences through phones, accessories, content and applications.