Sony Ericsson’s Q3 FY09 Results Indicate Lagging Sales, But Product Refresh Looks Very Promising

It’s simply amazing to see Sony Ericsson reporting in their Q3 FY09 results (PDF) such a continued drop in sales, making them look so entirely different than 2008 with only shipping 14.1 million units in that quarter, a decrease of 45% year-on-year. Sales for the quarter were Euro 1,619 million, a sequential decrease of 4% and a year-on-year decrease of 42%. The sequential decline in ASP (Average Selling Price) was due to product mix and continued challenging market conditions. Gross margin improved sequentially but dropped year-on-year due to lower sales and foreign exchange fluctuations. The sequential improvement was seen in both percentage rate and volume, driven by cost savings actions and successful sales of the W995 Walkman phone.

Income before taxes for the quarter, excluding restructuring charges, was a loss of Euro 198 million compared to a loss of Euro 283 million from the previous quarter. The reduced loss was due to better gross margin, as well as reduced operating expenses. I would be more glum about these results but I can see changes for the better, especially if you look at last quarter. SE is going in the right direction, and with a recent cash infusion from Sony things should be back on track. It also helps that Sony Ericsson is on the precipice of delivering their greatest range of competitive mobile devices to date with the Yari, Aino, and Satio.

“Our business in the third quarter started to show the effects of our ongoing transformation programme. Having refreshed our brand we are now better positioned to support the launch of new products such as Aino and Satio in Q4 2009. 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,” said Dick Komiyama, outgoing President, Sony Ericsson. “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.”

Bert Nordberg became President of Sony Ericsson succeeding Dick Komiyama, who remains as Executive Advisor until the end of 2009.

Sony Ericsson forecasts that the global handset market for 2009 will contract by approximately 10% from around 1,190 million units in 2008. Sony Ericsson estimates that its market share in units was about 5% in the third quarter.