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Sony Ericsson Q4 sales off, profit plunges: Dismal results still best Motorola’s fourth quarter

Sony Ericsson Mobile Communications lost a quarter of a billion dollars in the fourth quarter as sales were down 23% year-on-year.
SEMC shipped 24.2 million devices in the fourth quarter, down 21% year-on-year, and down 6% sequentially. The vendor shipped nearly 97 million devices in 2008, down from 103 million the prior year.
SEMC, the first of the top-tier handset vendors to report full results for the critical fourth quarter, said it estimated that global handset shipments by all vendors last year reached nearly 1.2 billion, representing 6% growth over 2007 – not the 10% SEMC had earlier projected.
The vendor suggested that it had retained its 8% global market share.
The cause of SEMC’s poor results was the global economic slowdown, according to Dick Komiyama, president of the joint venture. Analysts agreed, in part.
Analysts had expected more than 26 million shipments and said that SEMC’s portfolio was also responsible for the sobering results.
“We attribute some of Sony Ericsson’s weakness to tough competition at both the high (Apple, RIM) and low (Nokia, Samsung) ends, as its weak and aging portfolio falls short of expectations and it doesn’t have the scale to push aggressively into emerging markets,” wrote analyst Ittai Kidron at Oppenheimer, in a note to investors.
SEMC, which offers only GSM-based devices, had soared into the ranks of the top-tier handset vendors in 2006-07 as it offered voice-plus-one handset models that emphasized music with the Sony Corp. Walkman brand and camera phones under the CyberShot brand. It launched its ultra-high-end Xperia smartphone in the United States in November at about $800 retail and no carrier distribution. But it also found that producing competitive volumes for the global market required a low-end play in emerging markets and its results in that area have not been encouraging.
Kidron acknowledged – and Komiyama touted – the vendor’s cost-cutting measures, which are due to deliver annual savings of $636 million by year’s end. Komiyama also mentioned his company’s plans to build a smartphone based on the license-free Android platform, a move announced last month.
But Maynard Um, analyst at UBS, said doubt hangs over the joint venture’s long-term prospects.
“We are concerned that Ericsson’s focus on the competitive mid/high market, bearing the costs of developing for three OSs and increasingly relying on third parties (Sagem, HTC) leaves questions over Sony Ericsson’s long-term profitability,” Um wrote to investors today.
Despite the poor performance, SEMC still beat the pants off Motorola Inc., which shipped a mere 19 million handsets in the last quarter of 2008.


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