After Losses, Sony Ericsson Posts Profit
Posted on: Wednesday, 15 October 2003, 06:00 CDT
After steadily losing money since its formation two years ago, mobile phone maker Sony Ericsson posted its first quarterly profit but warned that falling prices on phones and competition would make it difficult to stay in the black.
The London-based company earned euro62 million ($72.7 million) for its third quarter ended Sept. 30 in contrast to a loss of euro93 million a year earlier. The company isn't publicly traded.
Sales rose to euro1.3 billion ($1.5 billion) with 7.1 million handsets sold, compared with euro869 million in the year-ago period when it sold 5 million phones.
Sony Ericsson cited improved sales in Japan where it has released several models, including phones with built-in cameras.
But its earnings were hurt by some euro58 million ($68 million) in restructuring costs, brought on in part by its decision to cease producing CDMA phones for the North American market and the elimination of 500 research and development jobs in the United States and Germany.
The company, a joint venture between Sweden's LM Ericsson and Japan's Sony Corp., decided to focus on developing phones that use GSM, or global system for mobile communications, covering 70 percent of the world's wireless users.
CDMA, or code division multiple access, is the dominant wireless standard in the United States, Japan, South Korea and China. In the United States, Sony Ericsson has lost market share to Motorola and Samsung.
Sony Ericsson is still producing CDMA phones for markets in Japan.
"We are encouraged by the improvements achieved during the third quarter and particularly with the high demand ... in Japan and the continued success of the T610-series in GSM markets," said Katsumi Ihara, the venture's president. The company has about 6 percent of the market, compared to its rival, Finnish phone maker Nokia, which commands more than 35 percent.
Last month, Sony Ericsson unveiled three new phones, including new gadgets that let users play video games.
The phones, which are expected to be sold worldwide, will be released during the fourth quarter of 2003, the joint venture between Ericsson and Japan's Sony Corp. said.
The phone maker's new models boast color screens, cameras and entertainment content it hopes will energize its sales worldwide.
"We have received very positive feedback from customers about these new products," Ihara said.
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On the Net:
Sony Ericsson: http://www.sonyericsson.com
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