Japan's Earthquake Continues to Impact Sony Ericsson's Quarterly Revenues

By Ashok Bindra July 15, 2011

The massive March 11 earthquake and tsunami in Japan continues to impact the country’s large manufacturers. Mobile phone manufacturer Sony Ericsson, for instance, attributed second quarter loss to parts shortage resulting from the March earthquake and tsunami.

According to Sony Ericsson, loss before taxes for the quarter was 42 million euros ($59.4), compared to an income before taxes of 31 million euros ($43.85) for the same quarter in the previous year, due to lower volume. Income before taxes for the previous quarter was 15 million euros ($21.22). The sequential change was reflective of lower gross margin and higher operating expenses, said the maker.

In reality, the quarter ended in a net loss of 50 million euros ($70.3), compared to a net income of 12 million euros ($16.98) in the same quarter in the previous year, and 11 million euros in the last quarter, said Sony Ericsson. Tax expenses in this quarter included the impact of tax adjustments and the distribution of profits and losses between various jurisdictions.

In a statement, Bert Nordberg, president and CEO of Sony Ericsson commented, “Sony Ericsson’s second quarter profitability was affected by the March 11 earthquake in Japan. We estimate that the impact of earthquake-related supply chain constraints on our portfolio was close to 1.5 million units, with most of the effect in the early part of the quarter. Our shift to Android-based smartphones continues with smartphone sales accounting for more than 70 percent of our total sales during the quarter.”

He added, “We have shipped more than 16 million Xperia smartphones to date. We have introduced eight new Xperia smartphones this year and we continue to see strong consumer and operator demand across the Xperia smartphone portfolio.”

The company’s second quarter financial report indicates that the units shipped during the quarter were 7.6 million, a 31 percent decrease year-on-year and a 6 percent decrease sequentially, due to a decrease in volume caused by constrained supply of critical components and an anticipated decline in the number of feature phones shipped.

Sony Ericsson estimates that its share in the global Android-based smartphone market during the quarter was approximately 11 percent in volume and 11 percent in value.

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Ashok Bindra is a veteran writer and editor with more than 25 years of editorial experience covering RF/wireless technologies, semiconductors and power electronics. To read more of his articles, please visit his columnist page.

Edited by Jennifer Russell

TechZone360 Contributor

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