Mobile phone maker Sony Ericsson Mobile Communications AB swung to a second-quarter loss after the March 11 earthquake and tsunami in Japan weighed on its earnings more than expected.
Chief executive Bert Nordberg said on Friday most of the hit was felt in early part of the quarter and the effect would be tiny in the third quarter. "There might be some minor spillover. In our planning this is behind us," he told Reuters.
Sony Ericsson sold 7.6 million phones in the quarter, compared with forecasts for eight to 11 million, as earthquake-related supply chain constraints cut sales by 1.5 million phones.
Mr. Nordberg said demand for smartphones, whose prices have started to fall to below €200 ($270), remained healthy and was hitting the sale of mid-range feature phones, a market he said he was "nearly willing to call ... collapsing."
Sony Ericsson, owned 50-50 by Swedish company Ericsson and Japanese group Sony Corp. , made a pretax loss of €42-million, compared with an average forecast for a €4.9-million profit in a Reuters poll in which estimates ranged from a €68-million loss to a €77-million profit.
The firm - formed in 2001 - thrived after its breakthrough with Walkman music phones and Cybershot camera phones before losing out to leaner rivals at the cheaper end. Its share of handset sales dropped below 3 per cent from more than 9 per cent at its height.
Sony Ericsson has slashed costs - including cutting around 4,000 jobs - and refocused on higher-margin smartphones that link to social networking sites like Facebook. The share of smartphones in its sales rose to more than 70 per cent from 40 per cent at the end of 2010.
"Smartphone volume was reassuring but Sony Ericsson still faces a considerable task in rebuilding and sustaining profit margins. Sony Ericsson is not alone in finding the smartphone transition a challenging one," CCS Insight analyst Geoff Blaber said.
Motorola Mobility Holdings Inc has shifted its focus to smartphones, while Sony Ericsson's bigger rivals Nokia Corp and LG Electronics Inc. could both report second-quarter losses due to their slow move into the high-end of the market.