Sony Ericsson's switch to smartphones results in 8 million Euro profit in Q1 2011
Following projections that had suggested the company would post a net loss, Sony Ericsson has revealed it managed to turn a surprise profit in Q1 2011 despite a 23 percent drop in shipments year-on-year.
Across the course of the quarter, the firm shipped 8.1 million handsets to retail down from 10.5 million in the same quarter in 2010.
Sales also fell by 19 percent to 1.15 billion.
However, the higher average selling price of each device sold - 141 to 134 in Q1 2010 enabled the firm to post a net income of 8 million.
Switching to smartphones
That's down from the 21 million it made in the same quarter last year, when a tax benefit inflated the bottom line.
However, Sony Ericsson's transition from selling feature phones to higher-priced smartphones is seen as an encouraging indicator of the firm's health moving forward.
"Sony Ericsson's profitability continues as we accelerate our shift towards an Android-based smartphone portfolio, with smartphones comprising over 60 percent of our total sales during the quarter," said CEO Bert Nordberg.
"Towards the end of the quarter we introduced the highly anticipated Xperia arc and Xperia Play, which have been well received by both operators and consumers around the world.
"However, the Japan earthquake made it a challenging quarter operationally and we are experiencing some disruptions to our supply chain."
Bulging borrowings
Sony Ericsson's income before taxes for the quarter came in at 15 million down 3 million year-on-year.
The firm has also revealed negative cash flow of 353 million from operating activities. The company borrowed 375 million from external sources across the quarter to enhance its liquidity and growth, resulting in total borrowings of 604 million.
Total cash balances on March 31 stand at 599 million.
Sony Ericsson estimates that its smartphone market share sits at 5 percent for units, and 3 percent in terms of pure market value.
[source: Sony Ericsson]