Sony Ericsson sees net profit evaporate to EUR 6 mln

Sony Ericsson Mobile Communications shipped 24.4 million mobile devices during the second quarter of this year, in line with the 27 June interim announcement of 24 million units, but 500,000 less than the mobile phone manufacturer shipped during Q2 2007. At the same time Sony Ericsson revenues dropped by 9 percent year-on-year to EUR 2.82 billion, due to unfavourable exchange rate fluctuation, continued slowing market growth in mid- to high-end phones and increased competition. The quarterly operating loss of EUR 2 million compares with an operating profit in the second quarter of 2007 of EUR 315 million, while Sony Ericsson’s net profit dropped from EUR 220 million in Q2 2007 to EUR 6 million in the second quarter of this year. The profits dropped due to a less favourable product mix, with particular impact in Europe, and increased price competition in general, as well as due to higher R&D investments as a percentage of sales. The Average selling price (ASP) for Sony Ericsson decreased year-on-year from EUR 125 to EUR 116, due to the impact of a greater proportion of lower priced phones in the product portfolio, as well as increased price competition in the market for mid- to high-end phones. Sony Ericsson estimates that its global market share for the second quarter is to be around 8 percent