Citing intense competition, unfavorable macroeconomic conditions and the effects of a natural disaster in Thailand, the president and CEO of Sony Ericsson Bert Nordberg justified the company’s lower revenue for the fourth quarter and full year ended December 31, 2011. Sales were down 16% year-on-year and 19% quarter over quarter.
It’s important to note that, last October, Sony announced that it would acquire Ericsson’s 50% stake in the JV for $1.46 billion, ending a roller-coaster ride of a partnership that failed to make significant inroads into the device market despite the brand recognition of its parent companies. The buyout is expected to close this month.
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During the last year, the number of units shipped decreased from 43.1 million in 2010 to 34.4 million in 2011, however the average selling price grew from 146 euros in 2010 to 152 euros last year.
This is reflected by the joint venture’s sales decrease, from US $8,2 billion (6,294 million euros) in 2010 to US $6.8 billion (5,212 million euros) in 2011.
According to Sony Ericsson’s report, the revenue decline reflects the decrease in feature phone sales which was only partially offset by an increase in smartphone sales. The company also says the sequential decline is due to its geographic and product mix, resulting in lower sales of both smartphones and feature phones.
For the fourth quarter, Sony Ericsson said sales were impacted by macroeconomic challenges in advanced economies contributing to weaker holiday sales, and certain component shortages from the flooding in Thailand in late October and early November 2011.
On the positive side, Nordberg noted that throughout 2011 Sony Ericsson has shifted business from feature phones to smartphones, and Android-based smartphone sales in the quarter increased by 65% year-on-year. Even so, the company said the year-on-year and sequential declines reflect a significantly lower number of feature phones shipped, partially offset by an increase in smartphone shipments.
