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Sony Ericsson posts Q4 loss, blames ‘intense competition’

Updated Dec 19th, 2018 7:43PM EST

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Sony Ericsson on Wednesday posted a €247 million loss, blaming “intense competition, price erosion and restructuring charges” for its poor results. While the Swedish joint venture did continue to make headway in the smartphone market, noting a 67% increase in Android-based Xperia smartphone sales compared to the fourth quarter in 2012, the average selling price of its phones dipped 14% sequentially and operating margin plummeted to -10% excluding restructuring fees. Mobile phone shipments were down to 9 million from 11.2 million units in the same quarter a year earlier, and revenue slid to €1.29 billion from €1.53 billion in the fourth quarter 2010. “Our fourth quarter results reflected intense competition, unfavorable macroeconomic conditions and the effects of a natural disaster in Thailand this quarter,” Sony Ericsson CEO Bert Nordberg said. For the full year, the company reported an operating loss of €243 million on €5.21 billion in sales. Sony Ericsson’s press release follows below.

Sony Ericsson reports fourth quarter and full year results

19 January 2012

  • Q4 loss reflects intense competition, price erosion and restructuring charges
  • 65% yearon-year increase in Android-based XperiaTM smartphone quarterlysales
  • 28 million Xperia smartphones shipped to date

The consolidated financial summary for Sony Ericsson Mobile Communications AB (Sony Ericsson) for the fourth quarter and full year ended December 31, 2011 is as follows*:


Q4 2010

Q3 2011

Q4 2011

FY 2010

FY 2011

Number of units shipped (million)
Average selling price (Euro)






Sales (Euro m.)






Gross margin (%)






Operating income (Euro m.)






Operating margin (%)






Restructuring charges (Euro m.)






Operating income excl. restructuring charges (Euro m.)






Operating margin excl. restructuring charges (%)






Income before taxes (IBT) (Euro m.)






IBT excl. restructuring charges (Euro m.)






Net income (Euro m.)






*All amounts are according to Swedish GAAP. 

Bert Nordberg, President and CEO of Sony Ericsson commented: “Our fourth quarter results reflected intense competition, unfavorable macroeconomic conditions and the effects of a natural disaster in Thailand this quarter. We are aligning our business to drive profitability and to meet customer needs. In spite of these challenges, throughout 2011 we’ve shifted our business from feature phones to smartphones, and our Android-based smartphone sales in the quarter increased by 65% year-on-year. The Xperia portfolio, including the recently announced Xperia NXT series, will serve as a cornerstone of our smartphone lineup in 2012.”

Units shipped during the quarter were 9 million, a 20% decrease year-on-year and a 5% decrease compared to last quarter. The year-on-year and sequential declines reflect a significantly lower number of feature phones shipped, partially offset by an increase in smartphone shipments. Sony Ericsson has shipped 28 million Xperia smartphones to date.

Average selling price (ASP) for the quarter was Euro 143, up 5% year-on-year but down 14% sequentially. The year-on-year increase is due to the shift to smartphones and geographic mix. The sequential decrease in ASP is attributed to geographic and product mix, including declining prices of products launched earlier in the year, and the absence of new products introduced in the fourth quarter.

Sales for the quarter were approximately Euro 1.3 billion, down 16% year-on-year and 19% quarter over quarter. The year-on-year decline reflects the decrease of feature phone sales which was only partially offset by an increase in smartphone sales.  The sequential decline is due to geographic and product mix, resulting in lower sales of both smartphones and feature phones. Fourth quarter sales were negatively impacted by macroeconomic challenges in advanced economies contributing to weaker holiday sales, and certain component shortages from the flooding in Thailand in late October and early November 2011. Xperia smartphones accounted for approximately 80% of total sales in the fourth quarter.

The gross margin for the quarter was 24%, a decrease of 6 percentage points year-on-year and 3 percentage points from the previous quarter. The year-on-year and sequential decreases are attributed to product and geographic mix. Fourth quarter gross margin was also adversely affected by intense smartphone price competition which more than offset the benefit of royalty and other items.

Loss before taxes, excluding restructuring charges, was Euro 154 million for the quarter, compared to income of Euro 39 million for the same quarter last year and of Euro 31 million in the previous quarter.  The year-on-year and sequential declines are due to lower gross margin and increased operational expenses, including higher development and selling expenses.

In December 2011, Sony Ericsson launched a restructuring program including global workforce reductions to reduce costs and drive competitiveness. Restructuring charges for the quarter are Euro 93 million and the program is estimated to be completed by the end of 2012.

The quarter ended in a net loss of Euro 207 million, compared to a net income of Euro 8 million in the same quarter of the previous year, and essentially a break even result in the previous quarter.

Cash flow from operating activities during the quarter was negative Euro 26 million. External borrowings were Euro 19 million during the quarter. Total borrowings were Euro 742 million at the end of the quarter. Total cash balances at December 31, 2011 were Euro 442 million.

Sony Ericsson estimates that its share of the global Android-based smartphone market was 10% in volume and 7% in value during the quarter and 10% in volume and 10% in value for the full year.

Sony Ericsson estimates that the global smartphone market for the full year 2011 increased by 60% in volume to 463 million units. Sony Ericsson estimates strong growth in the smartphone market in 2012.

In October 2011 Sony Corporation (“Sony”) and Telefonaktiebolaget LM Ericsson (“Ericsson”) announced that Sony will acquire Ericsson’s stake in Sony Ericsson and that Sony Ericsson will become a wholly-owned subsidiary of Sony.  The transaction is expected to close in late January to February, subject to customary closing conditions, including regulatory approvals.

The liquid identity is a registered trademark of Sony Ericsson Mobile Communications AB. Xperia™ is a trademark of Sony Ericsson Mobile Communications AB. Sony is a registered trademark of Sony Corporation. Ericsson is a registered trademark of Telefonaktiebolaget LM Ericsson. Any rights not expressly granted herein are reserved and subject to change without prior notice.

Zach Epstein
Zach Epstein Executive Editor

Zach Epstein has been the Executive Editor at BGR for more than 10 years. He manages BGR’s editorial team and ensures that best practices are adhered to. He also oversees the Ecommerce team and directs the daily flow of all content. Zach first joined BGR in 2007 as a Staff Writer covering business, technology, and entertainment.

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