Sony Ericsson Q3 phone shipments fall, profits hit

Stockholm (Reuters): Mobile phone maker Sony Ericsson reported third-quarter profit below market expectations as the company shipped far fewer phones than expected, though it said its high-end handsets were selling well.

Pretax profit for the firm, owned by Ericsson and Sony Corp. , was 62 million euros ($87.28 million), well below a mean forecast in a Reuters poll of 72 million.

Sony Ericsson posted third-quarter sales of 1.6 billion euros against a forecast for sales of 1.8 billion and shipped 10.4 million units, missing all 27 analysts expectations which ranged from 10.5 million to 13.9 million units.

The average forecast was for Sony Ericsson to ship 12 million phones during the July-September period compared to 11 million in the second quarter.

Chief Executive Bert Nordberg said Sony Ericsson’s overall performance was “stabilising.”

“Our strategy to focus on the smartphone segment is succeeding and smartphones now comprise more than 50 percent of our total sales,” he said in a statement.

The world’s fifth-biggest handset maker has cut costs and revamped its portfolio, pulling itself back into the black this year after seven straight loss-making quarters partly thanks new smartphone offerings such as the Xperia X10, Vivaz, X10 mini and X10 mini pro.

The firm has pinned its hopes for further profit growth on a surging market for phones offering PC-like functions and links to social networking sites. A Reuters poll showed analysts believe the cellphone market will grow around 11 percent this year. Smartphone sales are expected to increase more than 50 percent.

However, with all the top mobile brands jostling for market share, competition will be tough from such suppliers as Apple, Samsung Electronics, Taiwan’s HTC and industry leader Nokia.

Sony Ericsson repeated it only saw slight growth in the global handset market this year.

FT Brief

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