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Sony Ericsson Q4 in line, cautious on market

Sony Ericsson warned on Friday cellphone market recovery could be slower than analysts expect as the venture reported its seventh straight quarterly loss.

Handset makers and chip firms globally had a grim time through 2009 as the global downturn made consumers hold back on buying gadgets.

With improving economies, analysts and the top phone maker Nokia are forecasting market volumes rising to around 10% this year, but Sony Ericsson warned there would be only slight growth on the market.

“The global handset outlook for 2010 is improving but still a little uncertain in parts, so Sony Ericsson has some justification in forecasting cautious growth in unit volumes this year,” said analyst Neil Mawston from Strategy Analytics.

Sony Ericsson, owned by Sweden's Ericsson and Japan's Sony Corp, reported a quarterly pretax loss of €190 million ($270 million).

That nearly matched a forecast in a Reuters poll for a €194 million loss and would have been better had the firm not taken larger than expected restructuring charges.

Sony Ericsson has also been hampered by its weakness in the smartphone segment -- the only bright spot in a shrinking market -- leaving it to play catch up with rivals Apple, Nokia, LG Electronics and Samsung.

The firm said its turnaround plan, focused on cost cutting and new phones with advanced mobile Internet and networking functions was gaining traction.

“On the positive side we see that the new phones ... are well received by the customers and they are really selling more high-end phones, and that is raising the average sales price quite a bit,” Sydbank analyst Morten Imsgard said, adding the overall results are better than expected once restructuring charges are taken out.

The full benefit of the cost cuts will come through in the second half of the year, but competition will remain tough, Imsgard said.

Market leader Nokia said this week it would offer users free satellite navigation on its cellphones, following the lead taken by Google.

“It will also put pressure on Sony Ericsson to develop new software offerings and new ways to attract customers,” said Sydbank's Imsgard.

Ericsson's other joint venture, ST-Ericsson, also showed fourth-quarter core operating loss narrowing to $50 million thanks to restructuring and an improving market, though the chip-making venture said the overall market would see a seasonal decline in the first quarter this year. (Reuters)