Ina Fried

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Sony Ericsson Sales Drop, But Margins Rise Amid Continued Shift to Android; Quake Impact Also Felt

Sony Ericsson said that its quarterly earnings benefited from the company’s stronger lineup of Android products but that the company’s business has taken a hit from the quake that struck Japan last month. Sales also suffered a blow as the company continued its shift away from the feature phone market.

“Towards the end of the quarter we introduced the highly anticipated Xperia arc and Xperia Play, which have been well received by both operators and consumers around the world,” CEO Bert Nordberg said in a statement. “However, the Japan earthquake made it a challenging quarter operationally and we are experiencing some disruptions to our supply chain. We will continue to evaluate the situation.”

Investors have been eyeing the report not just to size up the cell phone industry, but also to get a sense of the impact on the electronics industry from the devastating earthquake that struck Japan last month.

Sales for the quarter ended March 31 were down compared to both the prior quarter and year-ago figures. Sony Ericsson said sales totaled 1.145 billion Euros ($1.63 billion), off 19 percent from a year ago and 25 percent from the prior quarter. Profit margins did grow, reaching 33 percent in the quarter, up 2 percentage points from a year ago and 3 percentage points from the prior quarter.

Sony Ericsson has been shipping fewer phones, but it is aiming to improve its bottom line by shifting to Android over a prior lineup that included far more lower-end feature phones. The company shipped 8.1 million phones in the quarter, down 28 percent from the prior quarter and 23 percent from the same quarter a year ago. The average selling price per unit, however, rose about 5 percent from a year earlier and 4 percent from the prior quarter, to 141 Euros ($200).

The company estimates it has about 5 percent of the global phone market, as measured by units, and about 3 percent when measured by dollar value.


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