Sony Ericsson slips on stockpiled handsets

Quarterly sales, profits slump

By Tony Smith, 15th April 2005

Steps to Take Before Choosing a Business Continuity Partner

Sony Ericsson saw its income halve during its most recently completed quarter, the first of fiscal 2005, on the back of falling sales and falling handset prices.

SE shipped 9.4 million phones during the three months to 31 March 2005, down 25.4 per cent on the previous quarter, but up 6.8 per cent on the year-ago quarter's total.

Despite that increase, sales were down 3.7 per cent between the two quarters from €1.34bn ($1.72bn) to €1.29bn ($1.65). Q1 FY2005's revenues were down 35.7 per cent on the previous quarter's €2.01bn ($2.58bn).

Income before tax fell 50 per cent sequentially, from €140m ($179.5) to €70m ($89.7m), and down 27.8 per cent year on year. The quarter's net income comes to €32m ($41m), down 41.8 per cent on the previous quarter's €55m ($70.5m) and down 61 per cent on Q1 FY2004's €82m ($105.1m).

Of course, the quarter following the Christmas sales season was going to be down on its predecessor, made worse, SE noted, by a shift in the Western European market toward lower-end handsets on pre-pay tariffs and by Q4 FY2004 inventories being carried over into Q1 FY2005, reducing demand further. SE also admitted it had launched few new products during the quarter and so failed to counterbalance the falling average selling prices of older models.

The products that it did launch in Q1 - most notably, perhaps, its Walkman-branded handset - will stand it in good stead during the coming year, the company forecast. It sees "good growth potential" with new subscribers coming into the market and existing customers looking to upgrade. ®