Sony Ericsson warned it is observing a weaker consumer sentiment in Western Europe while reporting a drop in the third quarter of the year. Analysts are blaming the slump on the eurozone sovereign debt crisis which has poisoned consumer demand.
The company reported zero net profit, which was ? 49 million the same quarter last year. The operating margin also fell to 2% from 4% the same quarter last year. Revenue remained almost the same as last year, ? 1.59 billion.
Sony Ericsson recently adopted Google’s Android platform on all its smartphones. Handsets with advanced computing and connectivity capabilities accounted for 80% of sales. This year alone, the company has sold 9.5 million handsets. However, the market share dropped to 1.7% in the second quarter under intense competition from Apple?s iPhone and Google?s Android platform’s other smartphones.
Chief Executive Bert Nordberg said that the average selling price of handsets was ?166 compared to last year?s ?155. He said the company output was slow at the beginning due to the Japanese natural disasters, but the machines are now operational. The new models have been successful in the Japanese market, such as Xperia Arc and Arco models.
Analysts insist the main challenge for Sony Ericsson is not only to have new competitive models, but also to keep the cost structure at bay to make some bottom-line profits.
Sources; WSJ, technews.com