Sony Ericsson More Than Doubles Profit in 1st Quarter

Mobile phone maker Sony Ericsson's first-quarter earnings more than doubled on strong sales of its Walkman music handsets, the company said Friday.

Net profit came to euro254 million (US$346 million) in the first three months of the year, up from euro109 million in the same period last year. Sales rose 47 percent to euro2.93 billion (US$3.99 billion) from euro1.99 billion in the first quarter of 2006.

London-based Sony Ericsson, a joint venture of Japan's Sony Corp. and Sweden's LM Ericsson, said strong sales growth in Asia, Latin America and Europe helped its market share grow 2 percentage points to 8 percent.

"The company captured market share in these markets through low and mid-tier products such as the W300 and W200 Walkman phones and the K310 camera phone without undermining profitability," Sony Ericsson said.

However, the closely watched average selling price of Sony Ericsson's handsets dropped to euro134 (US$182) from euro149 in the first quarter of last year.

Sony Ericsson has traditionally been known for its high-end and midlevel phones, such as its Walkman and CyberShot brands, while competitors like Nokia Corp. and Motorola Inc. have put more focus on emerging markets and cheaper handsets.

The company predicted the global mobile phone market would grow to about 1.1 billion handsets, in line with a forecast by market leader Nokia Corp. on Thursday.

Pasi Vaisanen, an analyst at FIM Securities in Helsinki, said the results were not as good as hoped, missing the consensus on both sales and pretax.

"After seeing Nokia's and Motorola's results I was expecting Sony Ericsson to have gained more market share," he said.

Vaisanen, however, said margins looked good.

Nokia said Thursday that its first-quarter earnings dropped nearly 7 percent as expanding sales of low-end models in emerging markets pushed down its average selling price. Nokia said its share of the global mobile phone market was up slightly at 36 percent while the average selling price of its handsets was euro89 (US$120).

The day before, U.S. mobile phone maker Motorola Inc. reported its first quarterly loss in three years, at US$181 million (euro133 million), hurt by costs and stumbling sales. The company's worldwide market share for handsets dropped to about 17.5 percent, down from a high of 22 percent the year before.

Motorola had been on a two-year hot streak, thanks to the popularity of its Razr phones, when it aggressively cut prices of Razrs and other high-end phones, especially in emerging markets, to boost market share. Profits dropped steeply.