Robust quarter for Sony Ericsson

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Sony Ericsson, the mobile phone maker, on Friday underlined its robust performance by reporting strong sales and profit growth for the first quarter of 2007.

However, like Nokia, the market leading mobile handset maker which reported results earlier this week, Sony Ericsson said the average selling price of its phones was falling as it seeks to expand its presence in emerging markets.

Sony Ericsson also estimated its market share in the first quarter of 2007 to be 8.5 per cent, down from 9 per cent in the last three months of 2006, which is traditionally its strongest period.

A joint venture between Sony of Japan and Ericsson of Sweden, Sony Ericsson generated revenue of €2.9bn ($4bn) in the first quarter of 2007, up 47 per cent year on year.

Net profit was €254m in the first quarter, up 133 per cent on the first three months of 2006.

Sony Ericsson’s robust performance, like Nokia, compares starkly with that of Motorola, the second largest mobile phone maker. The US group reported a loss of $181m for the first quarter of 2007.

Sony Ericsson leapfrogged Korea’s LG Electronics last year to become the world’s fourth largest mobile phone maker.

The average selling price of Sony Ericsson’s phones was €134 in the first quarter of 2007, down 10 per cent year on year.

Miles Flint, Sony Ericsson’s president, said the falling price reflected the joint venture’s increasing sales of mid priced phones, which were essential to boost market share.

“What we see is us progressively taking share at lower price points, as indeed we have to if we are to build our global market share,” he said.

“But it is not a headlong rush into the really ultra low area of the market. It is more share at mid-tier rather than ultra-low.”

For the first time, Sony Ericsson issued summary financial statements and details of where its sales are concentrated.

The joint venture generated sales worth €1.6bn in Europe, Middle East and Africa in the first quarter, €961m in Asia, and €365m in the Americas.

Gross margin was 30.3 per cent in the first three months of 2007, up from 29 per cent in the fourth quarter of 2006.

Operating margin was 11.8 per cent in the first quarter, down from 12.8 per cent in the last three months of 2006.

The summary financial statements disclosed that Ericsson received an advance dividend payment of €454m during the first quarter.

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