Sony Ericsson profits slump, but Android helps

The company does stay in the black, beating predictions of a loss in part because of a shift toward Android smartphones. Still, its supply chain was staggered by the Japanese earthquake.

Lance Whitney Contributing Writer
Lance Whitney is a freelance technology writer and trainer and a former IT professional. He's written for Time, CNET, PCMag, and several other publications. He's the author of two tech books--one on Windows and another on LinkedIn.
Lance Whitney
2 min read

Sony Ericsson saw its profits cut in half during the first quarter, but the company managed to stay in the black despite a drop in shipments and a blow to its supply chain from the Japanese earthquake.

Android smartphones such as the Xperia X10 have helped buoy Sony Ericsson.
Android smartphones such as the Xperia X10 have helped buoy Sony Ericsson. Josh Miller/CNET

For the quarter ended March 31, the mobile phone maker reported net income of 11 million euros ($15.7 million), down from 21 million euros in the year-ago quarter. Despite the drop, results beat the average of analysts' estimates, which had called for a loss of 27.1 million euros, according to Bloomberg. Sales fell 19 percent to 1.145 billion euros from 1.405 billion a year ago.

Sony Ericsson has been refocusing its product portfolio on higher-end Android smartphones, a strategy that seems to be bearing some fruit. Overall, the company estimates that its share of the smartphone market during the quarter was 5 percent in terms of units and 3 percent in terms of value.

"Sony Ericsson's profitability continues as we accelerate our shift towards an Android-based smartphone portfolio, with smartphones comprising over 60% of our total sales during the quarter," CEO Bert Nordberg said in a statement. "Towards the end of the quarter we introduced the highly anticipated Xperia Arc and Xperia Play, which have been well received by both operators and consumers around the world."

But the new Experia smartphones didn't have a great impact on shipments since they were released later in the quarter. And along with the rise in smartphones has been a decline in the number of feature phones, leading to an overall drop in shipments. For the quarter, the company shipped 8.1 million phones, 23 percent fewer than the 10.5 million shipped a year ago. Those numbers disappointed analysts, who had been forecasting shipments of 9.6 million units, Bloomberg said.

The mobile phone maker has also been feeling the effects of last month's earthquake and tsunami in Japan. The devastation has led to disruptions in Sony Ericsson's supply chain, another factor that has stalled phone shipments. A week after the earthquake, the company was already expecting issues with its supply chain as the area affected in Japan is home to a large number of component suppliers. The disruptions are also likely to continue to constrain supplies.

"The second quarter and possibly third will be difficult because of Japan," said Gartner analyst Carolina Milanesi, according to Reuters.