Sony Ericsson reports second quarter results

Press release
Jul 18, 2008 12:00 (GMT +00:00)
Q2 Highlights:
  • Break even results amid challenging market conditions and increased competition
  • Announcement of Open Mobile Software platform and Symbian Foundation
  • R&D investment continues
  • Alignment of operations to help restore profitable growth
    London, UK - The consolidated financial summary for Sony Ericsson Mobile Communications AB (Sony Ericsson) for the second quarter ended June 30, 2008 is as follows:

    Q2 2007
    Q1 2008
    Q2 2008
    Number of units shipped (million)
    Sales (Euro m.)
    Gross margin (%)
    Operating income (Euro m.) 
    Operating margin (%)
    Income before taxes (Euro m.)
    Net income (Euro m.)
    Average selling price (Euro)

    Units shipped in the quarter were 24.4 million, in line with our June 27, 2008 interim announcement of 24 million units. Sales for the quarter were Euro 2,820 million, a decrease of 9% compared to the second quarter of 2007 due to unfavourable exchange rate fluctuation, continued slowing market growth in mid- to high-end phones and increased competition. Gross margin also decreased compared with a year ago reflecting a less favourable product mix, with particular impact in Europe, and increased price competition in general. Income before taxes for the quarter decreased compared to the second quarter of 2007 for the same reasons, as well as due to higher R&D investments as a percentage of sales. 

    Average selling price (ASP) for Sony Ericsson decreased both sequentially and year-on-year due to the impact of a greater proportion of lower priced phones in the product portfolio, as well as increased price competition in the market for mid- to high-end phones. Market share for the second quarter is estimated to be around 8%.

    During the second quarter Sony Ericsson announced seven new phones, including its first 8 Megapixel Cyber-shot(TM) model, the C905. In addition the company started shipping 12 new phones, including a number of mid- to high-end Cyber-shot(TM) and Walkman(TM) models toward the end of the quarter. 

     "We are aligning our operations and resources worldwide to meet an increasingly competitive business environment and to help restore our capability for profitable growth. The measures we are taking are aimed at becoming a faster, more agile and more cost efficient organisation that can continue to create innovative products that excite consumers," said Dick Komiyama, President, Sony Ericsson. "Our target is to achieve a reduction in operating expenses of Euro 300 million annually, with the full effect expected to appear within a year. We estimate that our restructuring charges will be of the same magnitude as our reduction in operating expenses, and we will incur such charges as our measures are implemented."

    Sony Ericsson joined leading phone manufacturers, operators and vendors in announcing its support for the establishment of the Symbian Foundation, an initiative that will enable all members of the foundation to use the Symbian operating software platform, royalty-free. The Symbian Foundation is planned to be operational by the end of 2008.

    Sony Ericsson forecasts that the global handset market for 2008 will grow at a rate of around 10% from more than 1.1 billion units in 2007, with continued decline in industry ASP. The majority of this growth is expected to be in emerging markets where lower priced phones dominate.

    Challenging market conditions are expected to prevail for Sony Ericsson for at least the rest of 2008, and in particular for the third quarter.

    Cyber-shot(TM) and WALKMAN(TM) are trademarks of Sony Corporation.
    Financial statements and additional information:

    Financial statements:

    Consolidated income statement  (2)
    Consolidated income statement - isolated quarters
    Consolidated balance sheet
    Consolidated statement of cash flows (2)
    Consolidated statement of cash flows - isolated quarters

    Additional information:

    Net sales by market area by quarter

    - ENDS -

    Sony Ericsson is a top global industry player with sales of over 100 million phones in 2007. Diversity is one of the core strengths of the company, with operations in over 80 countries including manufacturing in China and R&D sites in China, Europe, India, Japan and North America.  Sony Ericsson was established as a 50:50 joint venture by Sony and Ericsson in October 2001, with global corporate functions located in London. For more information about Sony Ericsson please visit                           

    Investors / Analysts
    Ericsson Investor Relations                                     
    Gary Pinkham (Stockholm) +46 8 719 0858
    Susanne Andersson (Stockholm) + 46 8 719 4631                   
    Sony Investor Relations                                                                             
    Shinji Tomita (London) +44 20 7444 9713
    Tatsuyuki Sonoda (Tokyo) +81 3 6748 2180   
    Press / Media
    Sony Ericsson Global Communications and PR
    Aldo Liguori (London) +44 20 8762 5860
    Merran Wrigley (London) +44 20 8762 5862
    This press release contains forward-looking statements that involve inherent risks and uncertainties.  We have identified certain important factors that may cause actual results to differ materially from those contained in such forward-looking statements. For a detailed description of risk factors see Sony's and Ericsson's filings with the US Securities and Exchange Commission, particularly each company's latest published Annual Report on Form 20-F.
    The full report (including tables) can be downloaded from the following link: