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Sony Ericsson's last quarterly results before it becomes just Sony aren't pretty

Posted: , by Daniel P.

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Sony Ericsson's last quarterly results before it becomes just Sony aren't pretty
Sony Ericsson just published its Q4 and FY2011 earnings, and the issues that seemingly plagued HTC and, basically everyone but Samsung and Apple, like "intense competition and price erosion", have made it swing to a $317 million loss in Q4. Before that, in Q3, the company even eked out a profit, but now it tacks on "restructuring charges", and "Thailand flooding" to the list of reasons for its significant loss for the last quarter.

Sony Ericsson pegged its share of Android handsets globally at 10% in volume and 7% in value during Q4, and 10% in volume and 10% in value for the full year 2011, which confirms the dip in its average selling price for last quarter.  

This will be the last earning report of Sony Ericsson before the end of the joint venture is final in financial aspect as well, and without the money it doled out for commencing the restructuring, the Q4 loss rang at $198 million. Here is the full breakdown of financials for the last two quarters, and fiscal years 2010 and 2011.



Q4 2010

Q3 2011

Q4 2011

FY 2010

FY 2011

Number of units shipped (million)
Average selling price (Euro)

11.2
136

9.5
166

9.0
143

43.1
146

34.4
152

Sales (Euro m.)

1,528

1,586

1,288

6,294

5,212

Gross margin (%)

30%

27%

24%

29%

28%

Operating income (Euro m.) 

39

38

-227

159

-206

Operating margin (%)

3%

2%

-18%

3%

-4%

Restructuring charges (Euro m.)

-3

       -

-93

-42

-93

Operating income excl. restructuring charges (Euro m.)

43

38

-134

202

-113

Operating margin excl. restructuring charges (%)

3%

   2%

  -10%

3%

-2%

Income before taxes (IBT) (Euro m.)

35

31

-247

147

-243

IBT excl. restructuring charges (Euro m.)

39

31

-154

189

-150

Net income (Euro m.)

8

0

-207

90

-247


Let's not forget also that Sony Ericsson was mostly cruising in Q4, paying more attention to the restructuring after the breakup with Ericsson, rather than outing new handsets for the holiday season, so that's a big reason its shipped units diminished significantly from Q3 to Q4, as well as its ASP numbers. Bert Nordberg, President and CEO of Sony Ericsson, had the following comments on the last financial results coming from the joint venture as it was:

Our fourth quarter results reflected intense competition, unfavorable macroeconomic conditions and the effects of a natural disaster in Thailand this quarter. We are aligning our business to drive profitability and to meet customer needs. In spite of these challenges, throughout 2011 we’ve shifted our business from feature phones to smartphones, and our Android-based smartphone sales in the quarter increased by 65% year-on-year. The Xperia portfolio, including the recently announced Xperia NXT series, will serve as a cornerstone of our smartphone lineup in 2012.

Q1 could be more of the same, but when Sony's first dual-core phones with HD screens and LTE, like the Xperia S and Xperia ion launch in March-April, then Q2 might paint the very different picture of a resurging Sony, with its upcoming "four-screen" Dot Switch platform in tow.

source: SE

Press Release

11 Comments
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posted on 19 Jan 2012, 03:09

1. darac (Posts: 2156; Member since: 17 Oct 2011)


oh man. this is a scary and sad surprise.
I don't understand, they shipped even more smartphones(7.5-8 million xperias) than in the Q 3, and they have such loss..

posted on 19 Jan 2012, 03:40

2. Daniel.P (Posts: 102; Member since: 14 Jul 2011)


Actually Sony shipped 9 million handsets in Q4, compared to 9.5 million in Q3, as per the table. The biggest reason seems to be its operating margin going from 2% in Q3 to -10% in Q4 (if we count the restructuring charges, it went to -18%).

Increased expenses (Thailand floods and restructuring), coupled with diminishing average selling price of its handsets (you can find an Xperia arc for way less than $400 unlocked now), are what brought the loss on, but the picture should be different next quarter.

posted on 19 Jan 2012, 03:40 1

3. darac (Posts: 2156; Member since: 17 Oct 2011)


actually I have to correct my self.
they shipped about 7.2 million xperias, which is almost the same as in third quarter.
but those numbers are still keeping Sony on third place of all android manufacturers.
and even more interestingly, when you count in the number of android models they have on offer-just around 10 phones I think! - turns out SE SELLS RELATIVELY MORE ANDROIDS THAN ANY OTHER BRAND.
So even with floods, restructuring charges and drop of the margins per phone this is a strangely huge loss to me

posted on 19 Jan 2012, 03:45

4. darac (Posts: 2156; Member since: 17 Oct 2011)


@Daniel, yes, but you talk overall sales, which include feature phones.
their smartphone sales accounted to around 80 percent of the overall 9M sales in Q 4.
in Q 3, the corresponding number was around 70 percent out of 9.5M.

posted on 19 Jan 2012, 03:51 1

5. Daniel.P (Posts: 102; Member since: 14 Jul 2011)


True, but unfortunately, out of these smartphones, they didn't make a single popular high-end dual-core handset in 2011, for which they could charge $600+ with a fat margin, like Apple or Samsung do, which really weighed on Q4, when costs of production apparently increased due to the floodings and other issues, while the ASP went down.

posted on 19 Jan 2012, 03:58

6. darac (Posts: 2156; Member since: 17 Oct 2011)


..indeed.
not to mention their last touch screen feature phone efforts which were basically thrown money

posted on 19 Jan 2012, 07:33

7. TheLibertine (Posts: 484; Member since: 15 Jan 2012)


A thing Sony should try is to move the Playstation Portable (Vita) platform with the best of its games to their higher-end smartphones. And of course, be a bit different from Samsung that fascinates you with great specs, but great specs only, like they did it with the Tablet S.

posted on 19 Jan 2012, 07:37

8. RamyRamz69 (Posts: 390; Member since: 12 Dec 2011)


I really hope the next quarter is better for Sony. I love how they innovate, make different designs and most of all stay loyal to customers.

Yes, my Xperia Arc doesn't have the best dual core processor in 2011, neither 1 GB of RAM, no front facing camera, not the best 8MP Camera available around, but I just love it as it is and if you offer me the best phone available now I will deny it because I just simply love how Sony puts that touch on their phones.

posted on 19 Jan 2012, 09:49

9. darac (Posts: 2156; Member since: 17 Oct 2011)


I second that :-)

posted on 19 Jan 2012, 12:23

10. dmn666 (Posts: 202; Member since: 19 Oct 2011)


Arc/ Arc S are great phones and very reasonably priced. But Sony needs to catch up on HW specs for their flagships. Ion and S look good, yet they will probably get overshadowed by quadcores.Their flagships used to be pretty high-end. I wonder what made them solely focus on mid-range phones. Profit margin is pretty low there.

posted on 19 Jan 2012, 13:29 1

11. darac (Posts: 2156; Member since: 17 Oct 2011)


i think the concept of joint venture was dragging the thing.
they company was just too slow and non-reactive, without full support and devotion of neither the Sony neither Ericsson.
they released a flagship in march an that was it.
and were almost completely absent in US market.
anyway i'm sure Sony bought off the shares realizing that, realizing that phones are THE business now, and they're all set to roll it big time now.

i mean you can see that already - apart from launching a major device on the greatest US carrier for the first time (Xperia Ion), they will release a great phone in march (Xperia s), and then two even bigger guns later in Q3/Q4 ("Hayabusa" and "Mint")
it's a complete reboot and a whole other story. now lets just take some patience and wait Q2.

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