Sony Ericsson reported progress in its turnaround plan today as losses met expectations, but the mobile phone venture offered a cautious view on 2010 market conditions.
Handset makers and chip firms globally had a grim time through 2009 as the global downturn made consumers hold back on buying new gadgets.
Sony Ericsson has also been hampered by its weakness in the smartphone segment - the only bright spot in a shrinking market - leaving it to play catch up with rivals Apple, Nokia, LG Electronics and Samsung.
Sony Ericsson, owned by Sweden's Ericsson and Japan's Sony, reported a quarterly pretax loss of €190 million. That nearly matched a forecast in a Reuters poll for a €194 million loss and would have been better had the firm not taken larger than expected restructuring charges.
The firm said its turnaround plan, focused on cost cutting and new phones with advanced mobile Internet and networking functions was now gaining traction and the overall market should show slight growth in 2010.
While analysts were positive about the transformation in Sony Ericsson's phone portfolio, the outlook was a letdown.
"I think that is slightly disappointing because other people are looking at significantly stronger growth, including Nokia," said Nicolas von Stackelberg, analyst at Sal Oppenheim.
Nokia, the world's biggest handset maker, said in early December it expected the market to grow 10 per cent in 2010, though competition would cap profitability. Analysts on average expect the cellphone market to grow 9.3 per cent in 2010.
Sony Ericsson, unprofitable since the second quarter of 2008, said cost cutting and its new smartphones had helped boost the gross margin to 23 per cent against a forecast 17.7 per cent. The average selling price for Sony Ericsson's phones was €120, higher than analysts' forecast.
Ericsson's other joint venture, ST-Ericsson, also showed improving fourth-quarter figures thanks to restructuring and an improving market.
ST-Ericsson core operating losses shrank to $50 million though the chip-making venture said the overall market would see a seasonal decline in the first quarter this year.
Ericsson shares were up 2.3 per cent at 9.30am, outperforming the wider Stockholm market.
Reuters
