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Sony Ericsson Sales Down, Profits Near Zero

10/14/2011 02:55:55 PM Eastern

London - Cellphone maker Sony Ericsson
continued to stumble in its fiscal third quarter, posting "slightly above
break-even" net profits on a 1 percent decline in sales.

The performance followed a second
quarter in which the company slipped back into the red following five
consecutive quarters of net profits.

In the Americas, sales fell 45
percent compared with the year-ago quarter, with year-to-date Americas sales
falling 28 percent.

The company has been cutting back
its selection of feature phones to focus more on smartphones, and it said it
would shift its entire portfolio to smartphones in 2012. In the third quarter,
the company's Android Xperia smartphones accounted for more than 80 percent of
sales.

For the quarter, sales were down
1 percent to 1.59 million euros ($2.2 billion at an exchange rate of $1.39 to
one euro) and down for the year to date by 18 percent to 3.9 billion euros
($5.44 billion). The number of units shipped fell 8.7 percent from the year-ago
quarter to 9.5 million.

Operating income fell 40 percent
in the quarter to 38 million euros $52.7 million) and fell 83 percent for the
year-to-date to 21 million euros ($29.1 million).

Net income was slightly above zero,
down from a year-ago net income of 49 million euros ($68 million) but up from
the second quarter's net loss of 50 million euros ($69.3 million). For the
year-to-date, the company posted a net loss of 40 million euros ($55.5 million)
compared with a year-ago net profit of 82 million euros.

Gross margin percentage fell to 27
percent, down 3 percentage points from the year-ago period and down
sequentially by 4 percentage points.

In the second quarter, the
company blamed its flagging fortunes on Japan's earthquake.

In North America, third-quarter
sales fell 45 percent to 121 million euros ($167.8 million) from the year-ago
quarter and were down for the nine-month period by 28 percent to 466 million
euros ($646.2 million).