It's taken a long time but mobile handset company Sony Ericsson's reorganisation, and transition from selling average feature phones to focusing on high end smartphones seems to be paying off.

Driven by the launch of its first Android device, the Xperia X10, and the Symbian-based Vivaz, the average selling price of its phones rose in Q1 2010 to €134 ($180).

This is up 12 percent, compared to the last quarter and year-on-year.

In turn, this meant margins increased significantly to 31 percent, up from 8 percent year-on-year and from 23 percent in Q4 2009.

Win some, lose some

The number of units shipped was down however: 10.5 million compared to 14.6 million in Q4 2009 and 14.5 million in Q1 2009.

The result was a 19 percent drop in revenue year-on-year to €1.4 billion ($1.9 billion), but the company made a profit.

Its operating income was €20 million ($27 million), compared to a loss of €369 million ($498 million) in Q1 2009, and a loss of €181 million ($244 million) in Q4 2009.

Net income was €21 million ($28 million) compared to a loss of €293 million ($395 million) 12 months ago.

As of March 31, 2010, Sony Ericsson had €563 million ($759 million) in cash, which includes additional funding during Q1 2010 of €150 million ($202 million) from parent companies Sony and Ericsson on a 50:50 basis.

Full steam ahead

"We are pleased to see the positive impact of both the launch of new products and the business transformation programme improving the company's results," commented Bert Nordberg, Sony Ericsson's president.

"Increases in both gross and operating margins show that we are on the right track to build the correct cost structure for our business organisation and strategy."

Sony Ericsson started its reorganisation program in mid-2008, reducing its global workforce by approximately 3,150 staff for a current total of 8,450. The cost to date has been €342 million ($461 million).

[source: Sony Ericsson]