Sony Ericsson’s Q4: flat revenue, income down: Strong results for full year stoke ambitions

The Japanese-Swedish joint venture, Sony Ericsson Mobile Communications, had a mixed fourth quarter but ended 2007 with strong numbers and a projection of 10% industry-wide handset growth this year.
The news may have affected the vendor’s parent corporations’ stock values, as Sony Corp.’s stock rose sharply this morning on the news before settling down to $52.70 at midday, just above its opening price. L.M. Ericsson’s stock bumped up before falling in a bouncing ball pattern to $23.65, just below its opening value.
Sony Ericsson shipped nearly 31 million handsets in the final quarter of the year, an 18% increase over the same quarter last year, but slightly below analysts’ expectations.
Revenue of $5.5 billion was flat, year-on-year, and net income down 17% to $547 million.
Average selling prices were up sequentially from the prior quarter, due to a holiday emphasis on high-end handsets, but ASPs were down year-on-year 16% to $123 due to the company’s reach into emerging markets.
SEMC’s sales were up slightly in Europe, the Middle East and Africa (EMEA) and the Americas, but down in Asia, where Nokia Corp. is strong, according to analyst Ittai Kidron at Oppenheimer & Co. Inc. Revenue growth in EMEA and the Americas was due to the introduction of the company’s K550 Cybershot handset and three new models of Walkman handsets, including the W580, the company said.
But a picture of the full year looked much clearer and more positive for the company. Revenue was up 18% year-on-year to $128.9 billion, net income was up 12% year-on-year to $1.6 billion and units shipped jumped 38% to 103.4 million, which the vendor estimated gave it 2% greater market share than last year to garner more than 9% share overall in 2007. ASPs were down, in line with industry trends, by 15% to $183, reflecting an emphasis on volume shipments in emerging markets, where lower-priced handsets dominate the product mix.
Sony Ericsson’s new president, Dick Komiyama, said the company anticipates 10% industry-wide growth and that the vendor remains focused on becoming one of the world’s top three vendors. It will realize that goal by investing in research and development and brand-building, Komiyama said.
Kidron wrote in a note to investors that, with Samsung Electronics Co. Ltd. and Sony Ericsson reporting this week – and most major vendors due to report next week – that both Samsung and SEMC had weaker than expected fourth-quarter shipments, but overall handset demand remained strong for 2008.