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Sony Ericsson hit by loss but beats expectations

Mobile phone maker shows a higher third-quarter net loss of $243.7 million compared with $37.1 million a year ago, but still beats estimates.

Though stung by a higher net loss and lower sales for the third quarter, Sony Ericsson managed to beat expectations.

The mobile phone maker said Friday it lost 164 million euros ($243.7 million) in the quarter, compared with a loss of 25 million euros ($37.1 million) in the third quarter of 2008.

But analysts polled had been eyeing a net loss of 227 million euros. The company's results also showed an improvement over the second quarter when the company had a net loss of 213 million euros.

Sales for the third quarter fell to 1.62 billion euros versus 2.8 billion euros for the prior year's quarter.

Third-quarter 2009 results for Sony Ericsson
Third-quarter results for Sony Ericsson Sony Ericsson

The latest results were aided by aggressive cuts. Since mid-2008, Sony Ericsson has been on a mission to reduce operating expenses.

Earlier this year, the company announced a series of layoffs to reduce its global workforce by 5,000.

A joint venture between Sony and Ericsson, the company has also received a lifeline in the form of external financing. A total of 455 million euros was made available this year, with 350 million euros guaranteed by its parents.

"Our business in the third quarter started to show the effects of our ongoing transformation program," Dick Komiyama, Sony Ericsson's outgoing president, said Friday in a statement. "We have cleared channel inventories and have continued to realign internal resources and improve efficiency. We have also arranged external financing to strengthen the company's financial position."

The struggling company has been grazed by sluggish consumer demand for mobile phones and intense competition. The company said it expects the global handset market to decline by about 10 percent for the year. And its share of that market has remained small, resting at around 5 percent for the third quarter.

Management at London-based Sony Ericsson is in transition, with Komiyama retiring as president at year's end and handing the reins to Bert Nordberg. The two have already started running the company together as co-presidents.

Sony Chief Executive Officer Howard Stringer has also taken a more active role, replacing Sony Ericsson CEO Carl-Henric Svanberg this week as chairman of the board.

Sony Ericsson leaders say they are optimistic.

"Transforming the business for future growth and returning Sony Ericsson to profitability is the focus of the senior management team and will continue under the new leadership," Komiyama said. "Having refreshed our brand, we are now better positioned to support the launch of new products such as Aino and Satio (phones) in Q4 2009."

In January, the Gartner analyst group said that 2009 would be a deciding year for Sony Ericsson between profitability and growth in market share.