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Apr. 23, 2008

Handset joint venture operation Sony Ericsson reports a 48 percent decrease in its first quarter profit.

Sony said the lower profit was attributed to slower sales, higher R&D costs and a component shortage.

The company said it still expects the global handset market to grow by about 10 percent in 2008, due mostly to emerging markets in Asia and elsewhere.

Net income for the quarter was cut from $403.9 million for the first quarter of 2007 to $212.7 million for 2008. Sales fell to $4.29 billion from $4.66 billion a year earlier.

CEO Dick Komiyama said “Sony Ericsson continues to invest in expanding its product portfolio to appeal to a wider variety of consumers in both new and existing markets.”

Sony Ericsson said it shipped 22.3 million handsets during the quarter, at an average selling price of $192.50, down from $213 in 2007.

Martin Garner, principal associate analyst for mobile at global advisory and consulting firm Ovum commented on the report “this has been a tough quarter for Sony Ericsson and it has experienced the slowdown that the market dreads earlier than any other vendor. Roughly half of the drop in profits came from a shortfall in handset sales, with the other half being accounted for by a rise in R&D expenditure.”

Garner added that the handset venture’s strategy is good, but it needs to flawlessly execute it.

“These two phones are quite distinct, yet both have the potential to introduce more users to the world of the Internet on your mobile,” said Martin Winkler, director of global marketing and head of multimedia Web at Sony Ericsson.

Both handsets will be available in select markets during the second quarter.

In other handset news, the company introduced two new HSDPA phones into its lineup: the Z-780, aimed at markets outside of Europe and the compact G-502 following in the company’s classic style.

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Source: Sony Ericsson.