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Sony Ericsson Phone Venture Breaks Even

Stockholm, Sweden – The new Sony Ericsson Mobile Communications company continued to gain momentum in the first quarter, reporting a break-even result, which is earlier than anticipated, according to parent Ericsson.

The joint venture with Sony shipped 5.8 million phones, accounting for $993.7 million in sales. Ericsson said a favorable product mix was reflected by a higher-than-expected average selling price and faster return to profit.

Overall, Sony Ericsson achieved a break-even in adjusted operating income on lower volume than last year. In the first quarter of 2001, the Ericsson phone segment reported a $530.6 million adjusted operating loss.

Ericsson estimates that about 85 million phones were shipped industry wide during the first quarter, and expects 400 million to 420 million to be shipped this year. Replacement phones with color screens and multi-media capabilities are expected to be the growth drivers, said Ericsson.

Ericsson, overall, reported $3.6 billion in sales during the first three months, down 26 percent from the $4.8 billion recorded in the year-ago period.

The company reported a net loss of $356.9 million in the first quarter, compared with net income of $38.6 million in the same three months in 2001.

Ericsson expects to report a loss for the full year 2002, but with ongoing cost cutting, it plans for a return to profit in 2003. The company said market conditions should remain weak well into next year.