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Sony Ericsson seen improving in Sony hands

Mobile phone maker Sony Ericsson will deliver its final quarterly report as a joint venture on Thursday, before pinning its hopes on the consumer clout of its new sole owner Sony Corp to claw its way back into the top tier.

india Updated: Jan 19, 2012 17:55 IST
Simon Johnson

Mobile phone maker Sony Ericsson will deliver its final quarterly report as a joint venture on Thursday, before pinning its hopes on the consumer clout of its new sole owner Sony Corp to claw its way back into the top tier.



Sony Corp, with $85 billion in annual sales, announced it was to take full control of the Sony Ericsson joint venture in October with Ericsson receiving 1.05 billion euros for its 50 percent share. Sony Ericsson, once renowned for its market-leading Walkman and Cybershot phones, missed out on the boom in smartphones that has revolutionised the mobile phone market and powered the growth of rivals Apple and Samsung . The joint venture, which has struggled to make a profit in recent years, kicks off the cellphone industry's earnings with the industry keenly awaiting the company's comments on the effects of economic downturn on demand.



Fourth-quarter results, the last before Sony takes full control and Ericsson focuses more on its core mobile network gear business, should show that the company's situation has stabilised after cost cuts and a decision to focus entirely on smartphones powered by Google's Android operating system.



"The chance of things getting better are a little higher when it is part of Sony," said Greger Johansson, analyst at Stockholm-based analyst house Redeye. "Sony is good at everything from games to consumer electronics and graphics and will perhaps be a little more willing to share that with the mobile firm now."



Results are due on Thursday at 0730 GMT. Analysts polled by Reuters saw Sony Ericsson making a pre-tax profit of 41.7 million euros in the fourth quarter, bringing its full-year earnings up to 45.8 million. Analysts saw earnings rising to 140 million euros this year and increasing again to 190 million in 2013. Sony and Ericsson brought their mobile phone operations together in 2001 as a way of fighting competition from market leader Nokia and then world number two Motorola Inc.



Ericsson was the worlds third largest maker of mobile phones at the time, but the market has shifted significantly since. Sony Ericsson is now ninth-biggest player, Nokia is struggling and Apple has led innovation in smart phones, though it has also been overtaken in smartphone sales by Samsung. Sony, the maker of PlayStation game console, Bravia TVs and Vaio computers, aims to integrate phones with its other consumer electronic products, which should give Sony Ericsson the ammunition to fight against the iPhone, Samsungs Galaxy range and others. Full integration with Sony should also mean Sony Ericsson can get its costs down closer to the level of competitors.