Sony Ericsson profit rises more than estimates

Sony Ericsson Mobile Communications AB posted third-quarter sales and pretax profit that exceeded analysts’ forecasts after sales climbed in Asia while Western European revenue suffered from withering consumer confidence.

Pretax profit fell 53 per cent to euro 31 million ($42.6 million), the 50-50 handset joint venture of Sony Corp and Ericsson AB said in a statement on Friday. That beat the average estimate of euro 22.6 million in a SME Direkt survey. Sales rose 7.8 per cent to euro 1.6 billion, beating the euro 1.36 billion average estimate of 15 analysts in a Bloomberg survey.

Sony Ericsson, formed in 2001, has survived the era of Apple Inc’s iPhone by focusing on smartphones based on Google Inc’s Android platform. The company aims to distinguish itself from rivals through its integration with Sony’s entertainment range and distinctive hardware designs such as the Xperia Play, an Android phone with Playstation console controls and games.

“The results confirm the portfolio turnaround and that the company is going in the right direction, with extremely strong average selling prices, strong volumes and positive cashflow,” said Mats Nystroem, a Stockholm-based analyst with SEB Enskilda. “I think the market will upgrade its estimates for Sony Ericsson.”

Ericsson climbed 3.6 per cent to 71.15 kronor as of 11.54 am in Stockholm trading.

Sony Ericsson’s profit in the third quarter “rounded below euro 500,000,” Chief Financial Officer Bill Glaser said in an interview. That compared with analyst expectations for net income of euro 16.4 million, according to the average of 14 estimates in a Bloomberg survey.

Asia sales gained 81 per cent in the quarter to euro 985 million while Europe, Middle East and Africa declined 43 per cent to euro 480 million.

“Asia is going well for us,” Chief Executive Officer Bert Nordberg said in a telephone interview. “Western Europe is very, very weak. Western Europe is clearly suffering from consumer confidence, that’s our view.”

Sony is reviewing the partnership with an eye to adding it to its consumer electronics businesses, according to a Wall Street Journal report this month.

Nordberg referred questions about the possibility of a Sony buyout to the parent companies.

Sony Ericsson has about 12 per cent of the global unit market for Android handsets, it said in the statement. The company reviews its platform strategy regularly and is “very impressed” with Microsoft Corp (MSFT)’s Windows eight tablet software, Nordberg said.

The company posted a net loss in the second quarter as supply problems from the Japanese earthquake pared sales just as it was shipping new products.