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Sony Ericsson Posts Profit, But Sales Fall

Handset makerĀ reported a net profit for the fourth consecutive quarter as a result of cost cuts, but said it sold fewer phones in the competitive global market.

STOCKHOLM (AP) -- Handset maker Sony Ericsson on Thursday reported a net profit for the fourth consecutive quarter as a result of cost cuts, but said it sold fewer phones in the competitive global market.

The company, a joint venture between L.M. Ericsson and Sony Corp., posted a fourth-quarter profit of ā‚¬8 million ($10.8 million), compared with a loss of ā‚¬167 million a year ago.

It was the company's fourth straight quarterly profit after nearly two years of losses.

However, revenues during the three months ending Dec. 31 fell 13 percent to ā‚¬1.53 billion ($2.1 billion) from ā‚¬1.75 billion.

The company, which has tried to streamline its product portfolio to focus on higher-end smartphones, shipped 11.2 million units in the fourth quarter, a year-on-year decrease of 23 percent. The average selling price was up by 13 percent on the year to ā‚¬136, but fell by 12 percent compared with the second quarter.

Helena Nordman-Knutson, an analyst with Ohman Fondkommision in Stockholm, said the result was significantly below the market's expectations.

"The volumes dropped because they haven't launched any new phones," she said, adding this also had a negative effect on the product mix, which brought down the average selling price.

Nordman-Knutson said the situation for Sony Ericsson could become even worse in the first quarter, since there are no new product launches planned until the end of March.

Shares in Ericsson dropped 1.5 percent to 75.3 kronor ($11.37) in early Stockholm trading.

In 2010, Sony Ericsson cut its global work force by approximately 4,000 people in total, and decreased annual operating expenses by more than ā‚¬880 million.

"2010 was a turnaround year for Sony Ericsson. Our four consecutive quarters of profit reflect the success of our shift towards an Android-based smartphone portfolio," Sony Ericsson's CEO Bert Nordberg said in a statement.

The global handset market for the full year 2010 increased slightly in volume to almost 1.2 billion units, Sony Ericsson estimated. It said the global handset market was essentially flat year-on-year in the fourth quarter, when its market share was around 3 percent in units and 5 percent in value.

Sony Ericsson estimates its market share for the full year 2010 was around 4 percent in units and 6 percent in value.

For 2011, the company said it forecasts modest growth in units in the global handset market.

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