Next month we’re sure to hear about the latest smartphones from several of the world’s largest phone makers during Mobile World Congress, however that hasn’t stopped a number of leaks from occurring ahead of the show. The latest is a possible image of what is presumed to be Sony’s upcoming ST25i “Kumquat” Android smartphone. Specs are still slim at this point and we’re a bit suspicious since it still features the “Sony Ericsson” branding, but this could easily be an early prototype since even the smartphones on display at CES featured the Sony Ericsson name. Sony recently announced it was purchasing Ericsson’s stake in the Sony Ericsson joint venture and its newest phones are now branded “Sony,” but Xperia Blog, which leaked the image, said Sony may still launch devices with Sony Ericsson branding. 

[Via Engadget]

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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% year-on-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)	11.2 136	9.5 166	9.0 143	43.1 146	34.4 152
Sales (Euro m.)	1,528	1,586	1,288	6,294	5,212
Gross margin (%)	30%	27%	24%	29%	28%
Operating income (Euro m.)	39	38	-227	159	-206
Operating margin (%)	3%	2%	-18%	3%	-4%
Restructuring charges (Euro m.)	-3	-	-93	-42	-93
Operating income excl. restructuring charges (Euro m.)	43	38	-134	202	-113
Operating margin excl. restructuring charges (%)	3%	2%	-10%	3%	-2%
Income before taxes (IBT) (Euro m.)	35	31	-247	147	-243
IBT excl. restructuring charges (Euro m.)	39	31	-154	189	-150
Net income (Euro m.)	8	0	-207	90	-247

*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.

Sony came to this year’s Consumer Electronics Show with a pair of new Xperia smartphones and while they definitely look and feel like older devices in the company’s Xperia lineup in terms of design identity, they were much smoother than older Xperia models. The dual-core 1.5GHz processor in the Xperia S clearly plays a big role in speeding up Sony’s UI, and the 4.3-inch 720p Reality Display produces deep blacks and vivid colors. The UI itself is still one of our least favorite Android interfaces though, and the handset itself feels a bit light. The Xperia S also packs dual HD video cameras — a 12-megapixel camera on the back records 1080p HD video and the front facing camera supports 720p video chats — and the handset is PlayStation certified, giving it solid gaming capabilities without the added bulk of a dedicated controller as was the case with the Xperia Play. Pricing could make or break the Xperia S, but Sony hasn’t yet announced availability details. Check out our hands-on images of the Xperia S in the gallery below.

During the Consumer Electronics Show in Las Vegas on Tuesday we swung by Sony’s booth to get an up-close look at the Sony Xperia ion, an Android smartphone soon headed to AT&T. The Xperia ion is the first 4G LTE device from Sony and it’s equipped with a 1.5GHz dual-core processor, a 4.6-inch reality display with a 720p HD resolution and Sony’s Bravia Engine, a 12-megapixel camera capable of recording 1080p HD video, a 720p front-facing camera for video chat and an HDMI-out port. We love the thin form factor and faux metal accents, which give it a more premium look and feel. The device currently runs Android 2.3 (Gingerbread) but will be upgraded to Android 4.0 (Ice Cream Sandwich) in the future. The Xperia ion is also PlayStation Certified, which means it can run gaming titles specifically approved by Sony that may not be available on other handsets. AT&T will offer the Xperia ion during the second quarter of this year but pricing still hasn’t been announced. We’re looking forward to seeing if Sony can get back in the U.S. smartphone game, and the Xperia ion certainly looks like it could be a good start.

It looks like Sony Ericsson’s secret has finally been revealed in the form of “Nozomi.” The company has been teasing the previously mysterious and unannounced device for the past week on Facebook. The vendor’s German Facebook page recently revealed another teaser image, clearly showing a sleek and slim RAZR-style smartphone. The Nozomi is set to debut at next week’s Consumer Electronics Show, but ITProPortal published an extensive walk-through with the device early Friday morning. The smartphone, which is referred to as the Xperia HD, features a 1.5GHz Qualcomm Snapdragon MSM8660 processor and a 4.3-inch HD display with a 1280 x 720-pixel resolution. The Xperia HD will also sport 1GB of RAM, a massive 12-megapixel rear camera and will be running Android 2.3.7 with Sony’s custom user interface. Oddly enough, it does not include a microSD slot, leaving users with a mere 8GB of internal storage. Read on for an additional image of the Xperia HD and the company’s Facebook teaser photo.  

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Sony Ericsson has taken to the company’s Facebook page to tease a “big announcement” coming at next week’s Consumer Electronics Show. Keen-eyed readers suggest that the teaser images, pictured above, could depict the sequel to the Xperia Arc, though nothing has been confirmed. Over the past few weeks we have seen various Sony leaks suggesting that the company will soon announce a mega-phone set to launch on AT&T, code-named the LT28at. Sony Ericsson also recently registered a new trademark for the name Xperia Ion, and rumors have suggested that the “Nozomi” smartphone may land at this year’s show as well. Whether it is an Xperia Ion, Arc HD or the Nozomi, Sony looks to be gearing up for something big at this year’s Consumer Electronics Show.

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In the coming year, Sony Ericsson plans to have more of an Android presence in the United States. Earlier rumors suggested that Sony is planning a high-end smartphone that will land on AT&T, code-named “LT28at.” Additionally, another high-end device code-named “Nozomi” is currently being tested by carriers in Hong Kong and could possibly make its way stateside. According to a recently filed trademark with the U.S. Patent and Trademark Office, Sony is looking to market a new device as the “Xperia Ion.” The trademark was filed shortly before the holidays on December 13th for use in connection with “mobile phones.” With the Consumer Electronic Show just around the corner, we could certainly see this new Xperia device revealed at the show in just over a week.

[Via The Next Web]

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Sony Ericsson doesn’t have much of a presence in the United States smartphone market right now. Sure, it released the Xperia PLAY for Verizon Wireless and AT&T earlier this year, but it didn’t make much of a splash. Sony Ericsson’s U.S. position could change soon, though, if it decides to pump out a bunch of high-end smartphones. The latest rumor suggests that the company could release a phone with the model number “LT28at” that will land on AT&T later this year. It reportedly packs a number of impressive specs, including support for AT&T’s 4G LTE network as well as a 13-megapixel camera, a 4.55-inch Reality Display with a 1280 x 720-pixel resolution and a front-facing HD camera for video chats. The details come simply from a Bluetooth “End Product List” (EPL), which may or may not be legitimate, but we’re definitely hoping AT&T and Sony Ericsson announce something big during the Consumer Electronics Show next month.

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An image of an unannounced Android smartphone from Sony Ericsson code-named “Nozomi” has been published on a Chinese forum along with limited preliminary details. The smartphone reportedly features a 720p HD display and a dual-core processor, but additional specs remain a mystery. From the image, it looks like the phone features a display sized above 4 inches, and we can also see a unique lighting feature near the bottom of the device. The Nozomi is currently being tested by a carrier in Hong Kong according the forum user who posted the image, though a release could still be several months away. Earlier reports suggested that the Nozomi features a 4.3-inch 720p HD display, a 1.5GHz dual-core processor and Android 2.3.5 Gingerbread.

[Via Engadget]

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We recently sat down with Sony Ericsson President of North America Paul Hamnett to discuss the company’s future as a wholly-owned division of Sony Corporation, its upcoming smartphones and strategy pertaining to the U.S. market, Sony Electronics’ “four screen” opportunity, and much more. Check out the full video interview after the break.

Sony Ericsson announced on Tuesday that its Xperia arc S and Xperia neo V are now available unlocked in the United States from Sony Store locations. The Xperia arc S runs Android 2.3.4 (Gingerbread) and is equipped with a 1.4GHz processor, an 8.1-megapixel camera, a 4.2-inch “Reality” display and support for 3D and 2D sweep panorama photography. The Xperia arc S is available in white, black, blue and silver for $529.99 without a contract. Sony Ericsson’s Xperia neo V also runs Android 2.3.4 (Gingerbread) and has a 3.7-inch display, a 5-megapixel camera and a front-facing camera for video chats. It is available in white, silver and blue for $349.99 unlocked. Both phones will be available from other retailers, such as Newegg, beginning in early December. As a side note, Sony Ericsson also recently announced that its 2011 family of Xperia-branded smartphones will all be updated to Android 4.0 (Ice Cream Sandwich) at a later date, so both the Xperia arc S and Xperia neo V should receive the update at some point. Read on for the full press release from Sony Ericsson.

XPERIA™ arc S AND XPERIA™ neo V FROM SONY ERICSSON ARE NOW AVAILABLE IN THE U.S.

WHAT: The Xperia™ arc S and Xperia™ neo V from Sony Ericsson are now available for purchase in the U.S. at the Sony Store. The Xperia™ arc S and Xperia™ neo V showcase an enhanced entertainment experience with the latest Sony technology and Android™ operating system, version 2.3.4 (Gingerbread).

The Xperia™ arc S and Xperia™ neo V feature Sony’s groundbreaking 3D sweep panorama technology, which enables image capture and viewing in 3D by connecting the phone to a 3D TV using the HDMI output, so you can show off those amazing pictures from your last vacation or that video of the flash mob you saw today to your friends and family.

This version of Android™ Gingerbread includes new functionality and features that allow you to benefit from improvements to Sony Ericsson’s unique Facebook inside Xperia™. Share, see, like and comment on all your favorite stuff – from tracks on your music player to photos from your gallery and even apps and games downloaded on your phone.

Xperia™ arc S Key Features and Pricing:

·         Android™ 2.3.4 operating system

·         1.4 GHz processor

·         8.1 megapixel camera with Exmor R™ for mobile image sensor

·         4.2” Reality display with Mobile BRAVIA Engine® Engine

·         3D and 2D sweep panorama photography

·         Available in Pure White, Gloss Black, Midnight Blue, and Misty Silver

·         MSRP $549.99, unlocked

Xperia™ neo V Key Features and Pricing:

·         Android™ 2.3.4 operating system

·         3.7” capacitive, multi-touch screen

·         5 megapixel camera with 16x digital zoom

·         Front-facing camera

·         Available in Pearl White, Silver, and Blue Gradient

·         MSRP $349.99, unlocked

Android™ 2.3.4 – At a Glance*

·         Xperia™ smartphones introducing world’s first 3D sweep panorama functionality powered by Sony

·         Updated Facebook inside Xperia™ functionality for enhanced like, share and discover abilities

·         Gesture input – text input by swiping the finger from one letter to the next

·         New features including Google™ Talk with Video Chat for smartphones with front-facing cameras

Availability:

The Sony Ericsson Xperia™ arc S and Xperia™ neo V are available unlocked, at Sony Store.  Additional availability can be found at other retailers such as Newegg.com starting early December.  Check for pricing and availability.

* The Android 2.3.4 upgrade is currently rolling out for select unlocked 2011 Xperia™ smartphones as an over-the-air update or through Sony Ericsson PC Companion

Ericsson on Thursday announced that it has agreed to sell its stake in Sony Ericsson to Sony Corporation for €1.05 billion in cash. The deal is in line with earlier reports. Sony will become the sole owner of the mobile company, and it will integrate Sony Ericsson devices into its “broad platform of network-connected consumer electronics products.” The deal also includes a cross-licensing and ownership agreement agreement whereby Sony will have access to a number of related patents. “This acquisition makes sense for Sony and Ericsson, and it will make the difference for consumers, who want to connect with content wherever they are, whenever they want. With a vibrant smartphone business and by gaining access to important strategic IP, notably a broad cross-license agreement, our four-screen strategy is in place. We can more rapidly and more widely offer consumers smartphones, laptops, tablets and televisions that seamlessly connect with one another and open up new worlds of online entertainment.” Ericsson’s full press release follows below.

Ericsson: Sony to acquire Ericsson’s share of Sony Ericsson

• Sony Ericsson to become a wholly-owned subsidiary of Sony and integrated into Sony’s broad platform of network-connected consumer electronics products
• The transaction also provides Sony with a broad IP cross-licensing agreement and ownership of five essential patent families
• Ericsson to receive EUR 1.05 billion cash payment
• Sony and Ericsson to create wireless connectivity initiative to drive connectivity across multiple platforms

Ericsson (NASDAQ:ERIC) and Sony Corporation (“Sony”) today announced that Sony will acquire Ericsson’s 50 percent stake in Sony Ericsson Mobile Communications AB (“Sony Ericsson”), making the mobile handset business a wholly-owned subsidiary of Sony.

The transaction gives Sony an opportunity to rapidly integrate smartphones into its broad array of network-connected consumer electronics devices – including tablets, televisions and personal computers – for the benefit of consumers and the growth of its business. The transaction also provides Sony with a broad intellectual property (IP) cross-licensing agreement covering all products and services of Sony as well as ownership of five essential patent families relating to wireless handset technology.

As part of the transaction, Ericsson will receive a cash consideration of EUR 1.05 billion.

During the past ten years the mobile market has shifted focus from simple mobile phones to rich smartphones that include access to internet services and content. The transaction is a logical strategic step that takes into account the nature of this evolution and its impact on the marketplace.

This means that the synergies for Ericsson in having both a world leading technology and telecoms services portfolio and a handset operation are decreasing. Today Ericsson’s focus is on the global wireless market as a whole; how wireless connectivity can benefit people, business and society beyond just phones. Consistent with that mission, by setting up a wireless connectivity initiative, Ericsson and Sony will work to drive and develop the market’s adoption of connectivity across multiple platforms.

“This acquisition makes sense for Sony and Ericsson, and it will make the difference for consumers, who want to connect with content wherever they are, whenever they want. With a vibrant smartphone business and by gaining access to important strategic IP, notably a broad cross-license agreement, our four-screen strategy is in place. We can more rapidly and more widely offer consumers smartphones, laptops, tablets and televisions that seamlessly connect with one another and open up new worlds of online entertainment. This includes Sony’s own acclaimed network services, like the PlayStation Network and Sony Entertainment Network,” said Sir Howard Stringer, Sony’s Chairman, Chief Executive Officer and President. Mr Stringer also noted that the acquisition will afford Sony operational efficiencies in engineering, network development and marketing, among other areas. “We can help people enjoy all our content – from movies to music and games – through our many devices, in a way no one else can.”

“Ten years ago when we formed the joint venture, thereby combining Sony’s consumer products knowledge with Ericsson’s telecommunication technology expertise, it was a perfect match to drive the development of feature phones. Today we take an equally logical step as Sony acquires our stake in Sony Ericsson and makes it a part of its broad range of consumer devices. We will now enhance our focus on enabling connectivity for all devices, using our R&D and industry leading patent portfolio to realize a truly connected world” said Hans Vestberg, President and CEO of Ericsson.

When Sony Ericsson started its operations on October 1, 2001, it combined the unprofitable handset operations from Ericsson and Sony. Following a successful turnaround the company has become a market leader in the development of feature phones by integrating Sony’s strong consumer products knowledge and Ericsson’s telecommunications technology leadership. The WalkmanTM phone and Cyber-shotTM phone are well known examples.

With the successful introduction of the P1 in 2007, Sony Ericsson early on established itself in the smartphone segment. More recently, the company has successfully made the transition from feature phones to Android-based Xperia(TM) smartphones. By the end of the third quarter of 2011, Sony Ericsson held a market share of 11 percent (by value) in the Android phone market, representing 80 percent of the company’s third quarter sales. During its ten years in operation Sony Ericsson has generated approximately EUR 1.5 billion of profit and paid dividends totalling approximately EUR 1.9 billion to its parent companies. Prominent models include “XperiaTM arc” and “XperiaTM mini” which received 2011 EISA Awards, while recent notable additions to the lineup include “XperiaTM PLAY” and “XperiaTM arc S”.

The transaction, which has been approved by appropriate decision-making bodies of both companies, is expected to close in January 2012, subject to customary closing conditions, including regulatory approvals.

Ericsson has accounted for its 50 percent share in Sony Ericsson according to the equity method. Following completion of the transaction, Ericsson will have no outstanding guarantees relating to Sony Ericsson and will no longer account for Sony Ericsson as an investment on balance sheet. The transaction will result in a positive capital gain for Ericsson which will be defined after closing of the transaction.

SEB Enskilda is acting as Ericsson’s sole financial advisor in the transaction.

Facts about Sony Ericsson

Sales (FY 2010)          EUR 6,294 million

Net income (FY 2010)            EUR 90 million

Number of employees            7,500

(December 2010)

Headquarters  London

R&D sites                    Beijing, Lund, Silicon Valley and Tokyo

Market share               11% in Android (FY2011/3Q)

80 % of sales are smartphones (Android)

Apple is expected to launch a new version of its popular iPhone handset next year that will include an embedded 4G LTE radio. In line with numerous rumors to the same effect, DigiTimes on Tuesday reported that Apple is prepping a 4G LTE-compatible iPhone that is expected by its anonymous industry sources to launch in 2012. The report also claimed that Nokia, RIM and Sony Ericsson will launch LTE phones next year, joining popular LTE-enabled smartphone vendors Samsung, HTC, Motorola and LG. Citing the GSMA, DigiTimes notes that there are currently 35 live LTE networks around the world and that number is expected to surpass 100 by the end of 2012. Market research firm In-Stat expects shipments of 4G LTE handsets to surpass 154 million units in 2015.

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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.

Rumors of Sony’s plan to purchase Ericsson’s stake in the companies’ joint Sony Ericsson venture have come and gone over the years, but a new report claims the deed is nearly done. Sony is nearing a deal to take complete control of the cell phone vendor according to The Wall Street Journal, and analysts estimate that Ericsson’s 50% share of the JV could be worth between $1.3 billion and $1.7 billion. The report states that Sony intends to integrate the Sony Ericsson smartphone business with its tablet, gaming and computer operations in order to save on costs and create more complementary devices. Sony Ericsson reported a net loss of €50 million in the second quarter of 2011.

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