Sony Ericsson posts narrower Q4 loss

Sony Ericsson warned on Friday a recovery in the cellphone market could be slower than many expected as it reported its seventh straight quarterly loss.

The company shipped 14.6 million units in the fourth quarter ,which is a sequential increase of three percent and a year-on-year decrease of 40 percent. This increase was largely driven by market seasonality and successful sales of Satio and Aino phones.

The year-over-year decrease in both units and sales was the result of a downturn in the global handset market and a faster than anticipated shift to touch screen phones in the mid-priced sector of the market. With a more favorable product mix, the average selling price for the quarter rose sequentially by 5 percent to $170.

Gross margin percentage improved sequentially and year-on-year mainly driven by the successful sales of new, higher-margin phones as well as the positive impact of cost reduction activities.

With a loss of $56 million, the quarter was actually an improvement over the previous quarter of a loss of $280 million. The loss was the result of the improved gross margin and the benefits of reduced operating expenses. For the year, the company produced a loss of $1.24 billion compared with an income of $184 million in 2008.

During 2009, Sony Ericsson found additional external funding of $643 million to strengthen the balance sheet. The company estimates the global handsets market in units for the fourth quarter 2009 was flat year-on-year and that its market share was 5 percent in the fourth quarter.

Sony Ericsson forecasts a slight growth in units in the global handset market in 2010.

Sony Ericsson chief Nordberg said the company's turnaround plan, focused on cost cutting and new phones with advanced mobile Internet and networking functions, was gaining traction.

Sales of Sony Ericsson's new Aino and Satio phones -- along with cost cuts -- gave a big boost to the firm's gross margin.

"On the positive side we see that the new phones ... are well received by customers and they are really selling more high-end phones, and that is raising the average sales price quite a bit," Sydbank analyst Morten Imsgard said, adding the overall results are better than expected once restructuring charges are taken out.

The full benefit of the cost cuts are expected to come through in the second-half of the year, but management would not say when the firm would move back into the black.
With the forecasts being of a slight growth in units shipped in the global handset market in the upcoming year, it might just be good enough ground for the X10, X2 and the Vivaz to sell well enough to save the company.
Lets hope, for the sake of competition that SE gets back into black figures real soon.

Official Press Release