SonyEricsson Cites Financial Progress

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London - A refreshed handset portfolio and ongoing restructuring have begun to improve SonyEricsson's financial results, shrinking fourth-quarter operating losses sequentially and year-over-year, the company said in announcing its

financial results

.

Nonetheless, "2010 will still be challenging as the full benefit of cost improvements will not impact results until the second half of the year," said president Bert Nordberg.

Unit shipments fell 40 percent year over year to 14.6 million in the fourth quarter ending Dec. 31, but fourth-quarter shipments were up sequentially from the third quarter's 14.1 million. Fourth-quarter dollar volume fell 40 percent to $2.46 billion from the year-ago quarter and by 3.5 percent sequentially, with fourth-quarter operating losses shrinking 31 percent from the year-ago period to $254.8 million. Sequentially, fourth-quarter operating losses shrank 6.2 percent. The numbers are based on a currency conversion rate of 1 euro to $1.41.

Restructuring charges surged to $211.1 million in the fourth quarter from only $2.8 million in the third quarter. Excluding restructuring charges, operating losses would have only been $54.1 million, down from the previous quarter's $268.9 million operating loss. The reduction was attributed to reduced operating expenses and improved gross margins, which rose sequentially to 23 percent in the fourth quarter from 16 percent because of sales of new, higher-margin phones. Those phones brought the average selling price up sequentially by 5 percent to $169.

Fourth-quarter net losses of $235.1 million were down from a year-ago $1.18 billion but up slightly from the third quarter's $230.9 million.

For the full year, the company's unit shipments fell 41 percent to 57.1 million, sales were off 40 percent to $9.6 billion, operating losses surged to $1.43 billion from $159.1 million, and net losses surged to $1.18 billion from $102.8 million.

"The year-on-year decrease in both units and sales was mainly due to a downturn in the global handset market and a faster-than-anticipated shift to touchscreen phones in the midpriced sector of the market," the company said. The global handset market shrank 8 percent in calendar 2009 to about 1.1 billion units, with SonyEricsson getting 5 percent of those sales.

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