Sony Ericsson Q3 beats views, bolsters financial position
Mobile phone maker Sony Ericsson Friday posted a smaller-than-expected third-quarter net loss on cost cutting and as margins improved, and said it had bolstered its financial position.
The company, a joint venture between Sweden's L.M. Ericsson Telephone Co. and Japan's Sony Corp., reiterated its outlook for a 10% contraction of the global handset market in 2009 from 2008.
Still, it said the decline in global handset markets is slowing. Chief Executive Dick Komiyama also said that Sony Ericsson, which had a net cash position of EUR841 million on Sept. 30, had secured external financing to strengthen its balance sheet.
In July this year, parent company Sony's Chief Financial Officer Nobuyuki Oneda said the handset maker was in need of financial support from either the parent companies or external sources. Friday, Sony Ericsson said it has signed facilities of EUR455 million, with EUR350 million guaranteed by the parents. Of these funds, a total of EUR255 million have been drawn in September and October, Sony Ericsson added.
Sony Ericsson's third-quarter net loss widened to EUR164 million from EUR25 million the previous year, beating analysts' expectations for a EUR227 million loss. The company hasn't made a net profit since the second quarter of 2008.
The company's gross margin came in at 16%, down from 22% a year earlier but rising from 12% in the second quarter 2009. The sequential increase was driven by both cost-cutting and successful sales of the W995 Walkman phone, Sony Ericsson said.
Previously announced restructuring programs aimed to cut annual operating expenses by EUR880 million by the second half 2010 are continuing, it said.
The mobile phone maker, reporting a day after market leader Nokia Corp. posted a worse-than-expected third-quarter net loss but raised its 2009 outlook for handset industry volumes, estimated that its market share in the third quarter was 5%, unchanged from the second quarter.
Sony Ericsson saw both earnings and market share fall earlier in 2009, in part because the economic downturn has been particularly damaging to the middle tier of the mobile phone market where the company has a strong presence.
The company's lack of high-end products has also hit its market share according to analysts, but there have been some hopes that its new Satio, Aino and Yari phones, which are just being launched, may help reverse the trend.
Sony Ericsson's third-quarter sales came in at EUR1.62 billion, down from EUR2.81 billion a year earlier and slightly below expectations for EUR1.71 billion. The operating loss widened to EUR193 million from EUR33 million, against expectations for a EUR298 million loss.
The average selling price of its phones rose to EUR114 from EUR109 in the previous year while the number of units shipped fell to 14.1 million from 25.7 million.
The higher gross margin compared with the previous quarter and the external financing were both positive, said HQ Bank analyst David Hallden in Stockholm. Still, he said the third-quarter result was below his own expectations, although better than consensus.
At 0738 GMT, Ericsson's shares in Stockholm were up 2.7% at SEK73.10, against a 1.1% rise in the wider market.
Источник: Total Telecom
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