Sony Ericsson reports third quarter 2011 results

• Income before taxes was Euro 31 million
• 33 percent increase in sales quarter-on-quarter
• Smartphones account for more than 80 percent of total sales

The consolidated financial summary for Sony Ericsson Mobile Communications AB (Sony Ericsson) for the third quarter ended September 30, 2011 is as follows:

	Q3 2010	Q2 2011	Q3 2011
Number of units shipped (million) Average selling price (Euro)	10.4 154	7.6 156	9.5 166
Sales Euro m.)	1,603	1,193	1,586
Gross margin(%)	30%	31%	27%
Operating income (Euro m.)	63	-37	38
Operating margin(%)	4%	-3%	2%
Restructuring charges (Euro m.)	4	-	-
Operating income excl. restructuring charges (Euro m.)	67	-37	38
Operating margin excl. restructuring charges (%)	4%	-3%	2%
Income before taxes (IBT)(Euro m.)	62	-42	31
IBT excl. restructuring charges (Euro m.)	66	-42	31
Net income (Euro m.)	49	-50	0

Bert Nordberg, President and CEO of Sony Ericsson commented, “We delivered a solid 73 million Euro improvement in income before taxes as we rebounded from the previous quarter with a 33 percent increase in sales. Android-based Xperia™ smartphone sales now account for more than 80 percent of sales and we have shipped 22 million Xperia smartphones to date.  We will continue to invest in the smartphone market, shifting the entire portfolio to smartphones during 2012.”

Units shipped during the quarter were 9.5 million, a 9% decrease year-on-year due to a decline in feature phone shipments, partially offset by an increase in smartphone shipments. The 25% quarter-on-quarter increase was due to the higher volume of smartphones shipped.

Average selling price (ASP) for the quarter was Euro 166, up 8% year-on-year and 6% sequentially. The year-on-year increase was due to the shift to smartphones and geographic mix despite a negative effect from foreign exchange rates. The sequential increase was due to product and geographic mix.

Sales for the quarter were approximately Euro 1.6 billion and essentially flat year-on-year.

The gross margin percentage for the quarter was 27%, a decrease of 3 percentage points year-on-year and 4 percentage points from the previous quarter.  The year-on-year decrease in margin is attributed to product and geographic mix.  The sequential decrease in margin was due to inventory-related adjustments and product and geographic mix.

Income before taxes for the quarter was Euro 31 million, compared to income before taxes of Euro 62 million for the same quarter in the previous year.  Loss before taxes for the previous quarter was Euro 42 million. The sequential improvement was reflective of higher sales and lower operating expenses, while the year-on-year decline was due to lower gross margin percentage offset by lower operating expenses.

Net income during the quarter improved by Euro 50 million sequentially, while net income decreased by Euro 49 million year-on-year. Income taxes recorded during the quarter reflect the distribution of profits and losses between various jurisdictions and tax adjustments. Minority interest reflects higher net income at a majority-owned joint venture company.

Cash flow from operating activities during the quarter was Euro 53 million. External borrowings of Euro 51 million were repaid during the quarter, resulting in total borrowings of Euro 718 million at the end of the quarter. Total cash balances at September 30, 2011 amounted to Euro 466 million.

Sony Ericsson estimates that its share of the global Android-based smartphone market during the quarter was approximately 12% in volume and 11% in value.

Sony Ericsson maintains its forecast for modest industry growth in total units in the global handset market for 2011.

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.

Microsoft released its fiscal fourth-quarter earnings on Thursday and noted that its revenue of $17.73 billion was greater than any other fourth quarter in the company’s history. The Redmond-based firm also reported $69.94 billion in revenue for the fiscal year — also a record — up 12% from 2010. The company’s Entertainment & Devices division was particularly successful, reporting 30% growth in revenue for the fiscal fourth quarter and 45% for the entire year thanks to Xbox Live, the Xbox 360 game console, and the Kinect controller. “Throughout fiscal 2011, we delivered to market a strong lineup of products and services which translated into double-digit revenue growth, and operating margin expansion,” said Peter Klein, chief financial officer at Microsoft. “Our platform and cloud investments position us for long-term growth.” Read on for Microsoft’s full press release.

Microsoft Reports Record Fourth-Quarter and Full-Year Results

Microsoft Office, server products, and Xbox 360 drive $17.37 billion of fourth-quarter revenue

REDMOND, Wash. — Jul. 21, 2011 — Microsoft Corp. today announced record fourth-quarter revenue of $17.37 billion for the quarter ended June 30, 2011, an 8% increase from the same period of the prior year. Operating income, net income, and diluted earnings per share for the quarter were $6.17 billion, $5.87 billion, and $0.69 per share, which represented increases of 4%, 30%, and 35%, respectively, when compared with the prior year period.

For the fiscal year ended June 30, 2011, Microsoft reported record revenue of $69.94 billion, a 12% increase from the prior year. Operating income, net income, and diluted earnings per share for the year were $27.16 billion, $23.15 billion, and $2.69, which represented increases of 13%, 23%, and 28%, respectively, when compared with the prior year.

“Throughout fiscal 2011, we delivered to market a strong lineup of products and services which translated into double-digit revenue growth, and operating margin expansion,” said Peter Klein, chief financial officer at Microsoft. “Our platform and cloud investments position us for long-term growth.”

Microsoft Business Division revenue for the fourth quarter grew 7% and 16% for the full year. Office 2010 continues to be the fastest-selling version of Microsoft Office in history with over 100 million licenses sold. In June, Microsoft released Office 365 with familiar Microsoft Office collaboration and productivity tools delivered through the cloud.

Server & Tools revenue grew 12% for the fourth quarter, the fifth consecutive quarter of double-digit growth, and grew 11% for the full year. Windows Server, System Center, and SQL Server continued to drive revenue growth in the segment.

Windows and Windows Live Division revenue declined 1% for the fourth quarter and revenue for the full year decreased 2%. Excluding the impact of the prior year Windows 7 launch and revenue deferral, we estimate full-year revenue growth was in line with PC market growth of 2% to 4%. Windows 7 has sold over 400 million licenses and business deployments continue to accelerate. During the quarter, Microsoft unveiled a preview of the next version of Windows, codenamed Windows 8, featuring a new user interface and application experience.

Online Services Division revenue grew 17% for the fourth quarter and 15% for the full year, primarily driven by increases in search revenue. Bing’s U.S. search share increased 340 basis points year-over-year to 14.4% this quarter. Microsoft also released new features that incorporate the Facebook social graph to help users make better decisions based on their social connections.

Entertainment & Devices Division revenue grew 30% for the fourth quarter and 45% for the full year, due to the ongoing momentum of the console, Kinect, and Xbox Live. Xbox 360 has been the top-selling game console in the U.S. over the past twelve months. At E3 in June, Microsoft highlighted its upcoming game lineup, Xbox Live content partnerships, and enhanced content discovery using Bing and Kinect.

“A strong year of double-digit increases in revenue and earnings is a real credit to all of our Microsoft employees and partners around the world. We continue to see strong business demand across all of our products, from small businesses all the way up to the largest global enterprises,” said Kevin Turner, chief operating officer at Microsoft. “Our move to cloud services continues with the release and momentum of Office 365 and growth in Windows Azure. We’re providing our customers seamless and powerful ways to move to the cloud, and we are well positioned for the coming year.”

Business Outlook

Microsoft reaffirms fiscal 2012 operating expense guidance of 3% to 5% growth from 2011, or $28.0 billion to $28.6 billion.

Webcast Details

Peter Klein, chief financial officer, Frank Brod, chief accounting officer, and Bill Koefoed, general manager of Investor Relations, will host a conference call and webcast at 2:30 p.m. PDT (5:30 p.m. EDT) today to discuss details of the company’s performance for the quarter and certain forward-looking information. The session may be accessed at http://www.microsoft.com/investor. The webcast will be available for replay through the close of business on Jul. 21, 2012.

According to analyst estimates, Microsoft’s Xbox Live premium gaming service may generate over $1 billion in revenue for the fiscal year that ended on June 30th. Much of this revenue is coming from Xbox Live Gold members who pony up cash for additional content like game add-ons, avatars, and movies. Microsoft was uncharacteristically forthcoming about its Xbox Live memberships and confirmed that over half of its Xbox Live members pay for the premium Gold service at an average price tag of $50 per year. Though it still plays second fiddle to the Nintendo Wii in total console sales, this is good news for Microsoft’s gaming division and bodes well for the upcoming launch of its Kinect motion controller.

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Today, HP announced that it has officially completed the acquisition of Palm. The former Palm business unit will continue with webOS development under the leadership of Jon Rubenstein who will report directly to Todd Bradley, the executive vice president of HP’s Personal Systems Group. Look for the new HP/Palm to further develop its webOS smartphone lineup as well as extend the mobile platform to slate PCs and netbooks. Anyone excited for the future of webOS now that it has some big guns behind it?

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Motorola announced its Q1 2010 earnings and the communications hardware company exceeded analysts expectations. Twenty-Ten started off well for Motorola as the company posted a profit of $69 million or 3 cents per share which contrasts starkly with the $203 million loss or 10 cents per share posted in the same quarter last year. Net sales topped out at $5.04 billion, down 6% from the $5.37 billion posted in Q1 2009. Despite this slight slip, Motorola beat the Street as analysts were expecting 1-2 cents loss on $5.1 billion of sales. All this good news had a positive effect on Motorola’s stock which is currently trading at $7.20 per share, up 4% at the writing of this post. This is only part of the story, however, so hit the jump to see how the ever-important mobile division fared.

Motorola’s mobile division is still operating in the red but the outlook is positive. Mobile sales reached $1.6 billion, down 9% year over year and the division posted a loss of $192 million, a figure significantly less than the $545 million loss posted in Q1 2009. Motorola shipped 8.5 million units in Q1 2010, falling short of the 10 million that were expected. Smartphones were the bright point in an otherwise somber quarter. Of the 8.5 million phones that shipped, 2.3 million were smartphones, a figure that exceeded analyst’s expectations of 1.8 million.

Motorola expects the upcoming quarters to reflect this trend with its iDEN and feature phone sales remaining flat and its smartphone sales increasing both in the US and globally. The handset maker projects it can ship 12-14 million handsets per quarter by the end of the fiscal year with an increasing emphasis on smartphones. Motorola will remain in the feature phone business primarily due to demand in emerging markets, for brand extension, and to meet customer’s minimum portfolio requirements. Motorola intends to take no capital or inventory risk in this low-end market.

They plan to ship 20 total handsets by the end of the year and recognize that the smartphone is the key to its profitability in this highly competitive market. Motorola has limited interest in owning its own mobile OS and remains committed to Android, but that’s not exactly a shocker. The handset manufacturer is pleased with Google’s pace of innovation and believes the search giant has the infrastructure needed to keep the mobile platform fresh and competitive. In the end, this is good news for Android fans as we will see lots more Android handsets from Motorola in the future.

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A funny thing happened on the way to acquisition. The two largest carriers in the US, Verizon Wireless and AT&T, have commanded and conquered some smaller carriers and are now seemingly sharing the spoils. As already reported, AT&T announced on Friday that it will purchase a substantial portion of Verizon’s divested Alltel assets. On the same day, AT&T also announced that it will be selling certain portions of Centennial communications to Verizon Wireless as AT&T seeks final regulatory approval for the its acquisition of the small, rural carrier. Verizon will pony up $240 million for Centennial assets that include nearly 120,000 current subscribers in five service areas across Louisiana and Mississippi. In the end, we have AT&T buying assets from Verizon and Verizon buying assets from AT&T while T-Mobile and Sprint are nowhere to be found.

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Thanks, M!

UPDATE: Here’s what we think happened after talking with some people in the know… it seems as if this is concerning employees associated with Circuit City (estimated at around 240). Since they are Verizon Wireless employees, Verizon is said to have tried and relocated as many of them as possible to other stores, etc. We’re told that the employees that were let go got severances packages including outplacement services to help them find other employment.

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Bucking the downward trend, Verizon Wireless announced strong Q4 2008 earnings yesterday amidst the downturn. Verizon Wireless saw a net increase of 1.4 million non-acquisition related customers in Q4 2008, most of which were in the retail sector. Verizon added a total of 5.8 million new subscribers in 2008, a 9.9% increase which brings its total subscriber base to 72.1 million. These figures do not include customers added with the Alltel acquisition. Verizon also had a low churn rate with 1.35% churn amongst all customers and 1.05% amongst retail postpaid customers. Verizon saw double digit percentage increases in revenue with a total revenue of $12.8 billion in Q4 2008 and $49.3 billion over the year, a 12.3% and 12.4% increase respectively. With 65% of retail customers rocking 3G enabled devices, data revenues reached $10.7 billion for the year, a 44% increase over 2007. All in all a solid performance from Verizon Wireless.

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Best Buy reported on Tuesday its earnings for Q3 2008 which, despite a strong Black Friday showing, were abysmal. Best Buy pulled in a meager $52 million in earnings or 13 cents per share which is a 77% drop from the same quarter last year during which Best Buy raked in earnings of $228 million, or 53 cents a share. Best Buy did not even come close to meeting Wall Street’s expected earnings of 24 cents per share which were adjusted downward from Q3 2007 to reflect the slowdown in the economy. As result of this poor Q3 2008 showing, Best Buy CEO Brad Anderson has announced that Best Buy will be offering voluntary buyouts to all 4,000 of its employees. If a sufficient number of buyouts are not taken, then layoffs may ensue. In addition to cutting back on its workforce, Best Buy also plans on cutting expenditures in half and delaying new store openings. Not so good end of the year news for Best Buy and its employees but as always, we feel for all of those who will be affected by this announcement.

Thanks, Likeabite!

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RIM announced on Tuesday their new Web Signals technology that lets content providers push relevant and timely alerts directly to your Blackberry. Like SMS alerts on steroids, the new Web Signals will alert Blackberry users of the latest news, weather, sports, entertainment, financial information, etc. You won’t get plain old 160 character text alerts sent out en masse at regular intervals; the new Blackberry alerts will be automatically generated when new content is published and will provide one-click access to the associated online content. Can you see the content providers jumping for joy as they envision large increases in site traffic? Oh, yeah. Can you also see Blackberry users sinking under a deluge of push content? Nah, we didn’t think so either. Berryheads love their push content! At launch, RIM has Canada’s CBCNews, Thumbplay, Dada Entertainment, and The Washington Post on board and ready to launch their Web Signals powered alert services. Hey Blackberry users, let’s crank it up a notch and get on with some serious pushing!

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