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SonyEricsson Cites Financial Progress

– 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



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.