|Ericsson, ST-Ericsson (Chips), and Sony Ericssson (Handsets) |
Ericsson certainly didn't help mobile wireless sector sentiment with their reporting.
About what I expected, however. Infra is tough right now, and the Sony Ericsson results reported last week were awful (their report directly below) ...
>> Sony Ericsson Posts Fourth Consecutive Quarterly Loss
Company specializes in mid-range mobile handsets such as its Walkman Cybershot line of feature phones.
By Marin Perez
July 16, 2009 11:50 AM
Sony (NYSE: SNE) Ericsson continues to struggle, and its decreased shipments and sales led to a loss of about $300 million for the second quarter.
The company specializes in mid-range devices such as its Walkman or Cybershot line of feature phones, and this segment has been especially hard hit by the mobile industry's decline. The company shipped 13.8 million units for the period, which was down 43% from the same quarter last year.
The cell phone maker did improve its operating margins in part due to a massive restructuring effort that is predicted to save about $522 million in costs. Like Nokia (NYSE: NOK), Sony Ericsson sees the mobile market declining by about 10% in 2009 due to the global economic recession.
"As expected, the second quarter was challenging and we still believe the remainder of the year will be difficult for Sony Ericsson," said the company's president Dick Komiyama in a statement. "Our focus remains on bringing the company back to profitability and growth as quickly as possible, and our performance is starting to improve due to our cost reduction activities."
During its conference call Thursday, the company said it would likely need a capital injection in the second half of the year. Sony Ericsson said financing should not be an issue, and this could come from its parent companies Sony and Ericsson, or from outside sources.
The company introduced three high-end phones during the quarter, but these devices aren't scheduled to be released until the fourth quarter. The Satio, Yari, and Aino do represent the direction the company is taking its handsets, as each phone has strong multimedia capabilities and one even has deep integration with Sony's PlayStation 3. ###
ST-Ericsson results here ...
Ericsson Results here ...
>> Ericsson Reports 61% Decline in Profit
Kevin J. O’Brien (Berlin)
The Wall Street Journal
July 24, 2009
Ericsson, the largest maker of wireless network gear, posted a 61 percent decline in second-quarter profit on Friday, but the company’s incoming chief executive said he saw hope for growth in the rise of the mobile Internet.
“I definitely see mobile broadband overtaking fixed broadband in a few years,” said Hans Vestberg, the chief financial officer who will take over the company at start of next year.
Mr. Vestberg said he expected demand for mobile broadband to support Ericsson during the current downturn.
“It’s not clear what the applications will be at this point, but it is clear that there is huge appetite for it at the moment.” he said.
Mr. Vestberg, who will succeed Carl-Henric Svanberg, who is leaving to become chairman of BP, spoke after Ericsson said profit had declined to 797 million Swedish kronor, or $107 million, from 2 billion kronor a year earlier.
The profit decline, generated by losses at its Sony Ericsson cellphone and ST-Ericsson chip units, masked continued growth at Ericsson’s main business of selling wireless network equipment, where sales rose 4 percent, to 34.7 billion kronor from 33.3 billion in the period a year ago.
Sales of equipment for new wireless networks, versus upgrades and replacements, surged 24 percent, to 5.9 billion kronor from 4.8 billion.
Over all, Ericsson’s sales rose 7 percent to 52.1 billion kronor from 48.5 billion.
Mr. Vestberg, an 18-year Ericsson employee, said the rapid deployment of mobile broadband networks would lead to a boom in mobile Internet users that would exceed traditional fixed-line subscribers. So far, many consumers are using mobile broadband as an accessory to, but not a replacement for, their fixed-line service.
The number of people paying for mobile broadband service around the world rose 84 percent during 2008 to 186 million, according to Informa Telecoms and Media, an industry researcher. The number of fixed-line broadband connections reached 408 million in June, Mr. Vestberg said.
The number of mobile phone users whose networks can deliver mobile broadband speeds rose 12 percent, to 377 million.
“There aren’t enough fixed cables in the world to accommodate all of the growth and demand for broadband,” Mr. Vestberg said. “I have no doubt mobile broadband will eventually become the predominant technology. We can’t anticipate all the changes this will bring.”
Carolina Milanesi, an analyst at Gartner in London, said mobile broadband’s gains have been strongest in emerging markets, where fixed-line networks are rudimentary and too costly to expand. In more developed markets, many operators are subsidizing sales of lightweight laptop computers in return for service contracts.
“With mobile broadband, it is only a matter of time,” Ms. Milanesi said.
Sony Ericsson and ST-Ericsson, a venture with ST Microelectronics of France and the Dutch chip maker NXP, lost 2.1 billion kronor in the three months through June, which accounted for most of Ericsson’s decline in profit.
Sales at Sony Ericsson plunged 40 percent in the quarter to 1.7 billion kronor from 2.8 billion kronor a year earlier amid falling demand in emerging markets like Latin America, the company said. Sales at ST-Ericsson, a venture based in Geneva that began operating in February, reached 666 million kronor in the quarter.
Mr. Vestberg said Ericsson was committed to both ventures and was not interested in selling its 50 percent stake in Sony Ericsson, sentiments that were echoed this month by the Sony chief executive, Sir Howard Stringer.
“They are facing tough times with the overall market but we continue to support them 100 percent,” Mr. Vestberg said. He said ST-Ericsson was still in its early stages but would emerge as a major supplier of the mobile platforms to phone makers.
Mr. Vestberg said Ericsson may soon derive most of its sales from managing the telephone networks of mobile operators rather than the sale of network equipment. In the second quarter, Ericsson’s sales of professional services, lifted by a seven-year agreement with Sprint that Ericsson worth at least $4.5 billion, accounted for 38 percent of its total sales.
“We have no specific plan to make services the biggest business, but I wouldn’t rule it out,” he said.
- Eric -