Sony Ericsson Beats Sales Estimates as Asia Demand Increases

Sony Ericsson Mobile Communications AB posted third-quarter sales and pretax profit that exceeded analysts’ forecasts after sales climbed in Asia while Western European revenue suffered from withering consumer confidence.

Pretax profit fell 53 percent to 31 million euros ($42.6 million), the 50-50 handset joint venture of Sony Corp. (6758) and Ericsson AB said in a statement today. That beat the average estimate of 22.6 million euros in a SME Direkt survey. Sales rose 7.8 percent to 1.6 billion euros, beating the 1.36 billion- euro average estimate of 15 analysts in a Bloomberg survey.

Sony Ericsson, formed in 2001, has survived the era of Apple Inc. (AAPL)’s iPhone by focusing on smartphones based on Google Inc.’s Android platform. The company aims to distinguish itself from rivals through its integration with Sony’s entertainment range and distinctive hardware designs such as the Xperia Play, an Android phone with Playstation console controls and games.

“The results confirm the portfolio turnaround and that the company is going in the right direction, with extremely strong average selling prices, strong volumes and positive cashflow,” said Mats Nystroem, a Stockholm-based analyst with SEB Enskilda. “I think the market will upgrade its estimates for Sony Ericsson.”

Photographer: Kimimasa Mayama/Bloomberg

A Sony staff member demonstrates a game on an Xperia phone. Close

A Sony staff member demonstrates a game on an Xperia phone.

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Photographer: Kimimasa Mayama/Bloomberg

A Sony staff member demonstrates a game on an Xperia phone.

Ericsson climbed 3.6 percent to 71.15 kronor as of 11:54 a.m. in Stockholm trading.

Distinctive Designs

Sony Ericsson’s profit in the third quarter “rounded below 500,000 euros,” Chief Financial Officer Bill Glaser said in an interview. That compared with analyst expectations for net income of 16.4 million euros, according to the average of 14 estimates in a Bloomberg survey.

Asia sales gained 81 percent in the quarter to 985 million euros while Europe, Middle East and Africa declined 43 percent to 480 million euros.

“Asia is going well for us,” Chief Executive Officer Bert Nordberg said in a telephone interview. “Western Europe is very, very weak. Western Europe is clearly suffering from consumer confidence, that’s our view.”

Sony is reviewing the partnership with an eye to adding it to its consumer electronics businesses, according to a Wall Street Journal report this month.

Nordberg referred questions about the possibility of a Sony buyout to the parent companies.

Sony Ericsson has about 12 percent of the global unit market for Android handsets, it said in the statement. The company reviews its platform strategy regularly and is “very impressed” with Microsoft Corp. (MSFT)’s Windows 8 tablet software, Nordberg said.

The company posted a net loss in the second quarter as supply problems from the Japanese earthquake pared sales just as it was shipping new products.

To contact the reporter on this story: Diana ben-Aaron in Helsinki at dbenaaron1@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net

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