Thursday, July 13, 2006

Sweet Music at Sony Ericsson

A couple of articles on glowing 2nd quarter results from Sony Ericsson, the mobile-phone joint venture of Sony (SNE) and Ericsson (ERICY). The company also "boosted its industrywide handset sales forecast for 2006 to 950 million units from 900 million." writes that "for the quarter, Sony Ericsson shipped 15.7 million phones. That's a third more than a year ago and an 18% sequential increase from the first quarter. Revenue for the period was 2.27 billion euros ($2.89 billion), well ahead of analysts' expectations for 2.13 billion euros. Net income in the quarter rose to 143 million euros, from 109 million in the prior quarter, and nearly double the year-ago level. The company claims it added market share in the quarter."

Lehman Brothers analyst Tim Luke figured "Sony Ericsson captured 6.8% of the market, up from 6.2% in the previous quarter. The gains may have come at the expense of larger rivals like Nokia (NOK) and Motorola (MOT)."

Charter Equity Research analyst Ed Snyder wrote of Sony Ericsson's Walkman effort in a research note and said, "Its success in spurring much higher sales, revenue and profits is an early indication of what will happen in the wider market once Nokia and Motorola release sleek handsets with strong MP3 functions."

The article did point out that "the average price per Sony Ericsson phone fell to $183 from $190 in the first quarter, as the company introduced cheaper phones."

In a article, Naoki Fujiwara at Shinkin Asset Management said, "the results were good, but the cell-phone market is growing and market share is becoming more and more important. Sony Ericsson needs to increase their lineup, while keeping their focus on their strength with the Walkman and camera phones. They had a lot of new hit products this quarter, but it's difficult to keep that up."

Carolina Milanesi at Gartner added that Sony Ericsson is "doing very well and they sold more phones than we expected in the quarter. The Walkman and Cyber-shot moves are really good. The concern is what's going to come next. Music is the great application at the moment, but everybody is talking about mobile TV and we've seen nothing in that area."