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Sony Ericsson’s Earnings Report (Q1 2007)

April 20, 2007 in Wireless Industry News

Sony Ericsson has been doing pretty damn well for itself, I must say, beating analyst estimates with impressive earnings stemming from sales of its high-end cell phones.

Sony Ericsson fails to impress analysts.

This time around Sony Ericsson did not impress analysts.

Until last quarter, that is. Unfortunately, this time around they didn’t live up to analysts’ expectations of $500 million dollars of pre-tax profit and $4.19 billion in sales. SE’s earnings were more around $492 million profit and $3.97 billion in sales.

One of the key measurements that analysts look at to figure out just how profitable a cell phone manufacturer is called average selling price, or ASP. It’s how much SE, or Nokia, or any other wireless giant would get for any given phone sold, including high-end and low-end phones.

Nokia’s ASP has been falling slightly, due to stronger sales of the “crap phones” to emerging markets. Since there’s a smaller profit margin on these phones, selling too many of these phones will lower the ASP and also Nokia’s profit margins.

Sony Ericsson is pretty much in the same hole. The company shipped out more phones than estimated (21.8 million to the analysts’ estimates of 21.7 million), but too many of these were low-end phones. So SE’s ASP dropped to $182.

The good news was that SE managed to gain 2% market share, now at 8% of the global market.

The bad news was the stock fell $1.08.

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