Sony Ericsson post Q4 loss as sales fall

STOCKHOLM — Mobile phone maker Sony Ericsson, which is soon to be wholly-owned by Sony Corp., on Thursday reported a fourth-quarter loss due to costs related to restructuring as well as lower sales amid the financial crisis.

The London-headquartered group posted a loss of (euro) 207 million ($265 million) in the quarter, compared with a profit of (euro) 8 million in the same three months a year ago.

Aside from weaker sales, which dropped 16 percent to (euro) 1.29 billion, the LM Ericsson and Sony joint venture said margins were also squeezed severely by intense pricing competition on the smartphone market.

The gross margin shrank to 24 percent from 30 percent, while operating costs soared to (euro) 538 million from (euro) 427 million.

“Our fourth quarter results reflected intense competition, unfavorable macroeconomic conditions and the effects of a natural disaster in Thailand,” CEO Bert Nordberg said.

The group, which shipped 9 million units in the quarter — 20 percent less than a year earlier — said it expects the global smartphone market for 2011 to have increased by 60 percent and estimates “strong growth” in that market in 2012.

In 2001, Sony and Ericsson combined their unprofitable handset ventures in the Sony Ericsson joint venture. Although enjoying some early success with its Walkman and Cyber-shot phones, the company later suffered from the competitive climate in the smartphone market.

In October, the two companies announced that Ericsson would sell its 50 percent stake to Sony for (euro) 1.05 billion. The deal is expected to close in the first quarter.

Despite the weaker earnings results for Sony Ericsson, shares in wireless network maker Ericsson rose 1.7 percent to 68.10 kronor ($9.88) in early Stockholm trading.