Sony reports falling sales at Sony Ericsson ahead of buyout

Sony reports falling sales at Sony Ericsson ahead of buyout

Sony has revealed that Sony Ericsson sales for the second quarter ending 30 September have decreased 1.1% year on year to €1,586m (£1,367m).

The company revealed the figure as part of its quarterly report as it owns 50% of the business. From next year, it will own the entire smartphone manufacturer.

Explaining the fall in sales, Sony reports: ‘Although total volume declined due to the lower number of feature phones shipped, total sales decreased only slightly due to an increase in average selling price, which resulted from a higher portion of smartphone shipments.’

The figures show income before taxes decreased €34m (£29m) year on year to €31m (£27m) due to lower gross margin, partially offset by lower operating expenses – as announced by Sony Ericsson last month.

Sony says the year on year decline in gross margin was attributed to product and geographic mix and resulted in Sony recording equity in net loss of Sony Ericsson of 0.03bn yen (£0.2m) for the current quarter, compared to income of 2.6bn yen (£208m) in the same quarter of the previous fiscal year.

The figures come just days after Sony Corporation and Telefonaktiebolaget LM Ericsson announced that Sony will acquire Ericsson’s 50% stake in Sony Ericsson Mobile Communications AB, making the mobile handset business a wholly-owned subsidiary of Sony for €1.05bn (£904m).

Sony says the transaction gives it an opportunity to rapidly integrate smartphones into its broad array of network-connected consumer electronics devices – including tablets, televisions and personal computers – for the benefit of consumers and the growth of its business, and will provide it with a broad intellectual property (IP) cross-licensing agreement covering all products and services of Sony as well as ownership of five essential patent families relating to wireless handset technology.

The transaction, which has been approved by appropriate decision-making bodies of both companies, is expected to close in January 2012, subject to customary closing conditions, including regulatory approvals.

As a result of obtaining full control of Sony Ericsson, Sony will consolidate Sony Ericsson from the closing date of the acquisition. The resulting impact of the acquisition to Sony’s consolidated results for the fiscal year ending on 31 March 2012 is currently being evaluated.

Sony has warned that it is on target to make its fourth annual loss in succession. The warning came as it unveiled a 27bn yen (£216m) loss for its second quarter, compared with a profit of 31bn yen (£248m) for the same period last year.

The company said the strong yen, floods in Thailand, and weak demand in the US and Europe was to blame.

Joe Fernandez

Written by Mobile Today
Mobile Today

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