SOURCE: Ericsson

April 20, 2007 02:47 ET

Sony Ericsson starts 2007 with strong first quarter

STOCKHOLM, SWEDEN -- (MARKET WIRE) -- April 20, 2007 --


Q1 Highlights:

* Year-on-year volume & sales growth of 63% and 47% respectively

* Income before tax rose 139% year-on-year to EUR 362 million

* W880 further strengthens Walkman® phone sales

* Low and mid-tier products generating market share gains year-on-year

The consolidated financial summary for Sony Ericsson Mobile Communications AB (Sony Ericsson) for the first quarter ended March 31, 2007 is as follows:

                                  Q1 2006   Q4 2006   Q1 2007
Number of units shipped (million)    13.3      26.0      21.8
Sales (Euro m.)                     1,992     3,782     2,925
Gross Margin %                      26.3%     29.0%     30.3%
Operating Income (Euro m.)            143       484       346
Operating Margin %                   7.2%     12.8%     11.8%
Income Before Taxes (Euro m.)         151       502       362
Net income (Euro m.)                  109       447       254

Average Sales Price (Euro)            149       146       134
Beginning this quarter Sony Ericsson is expanding its financial disclosure. More information can be found at the end of this report. This decision was made as a result of the company's continuing growth and in consultation with the parent companies.

Units shipped in the quarter reached 21.8 million, a 63% increase compared to the same period last year, generating significant year-on-year market share gains and continuing the momentum of 2006. Sales for the quarter were Euro 2,925 million, representing a year-on-year increase of 47%. Income before taxes for the quarter was Euro 362 million representing a year-on-year increase of 139%. Net income for the quarter was Euro 254 million. ASP decreased to Euro 134 as we continue to expand our product portfolio successfully with mid-tier and with more competitively priced phones.

"Sony Ericsson has made a very positive start to the year selling 63% more phones in the first quarter than a year ago. The strong sales and solid financial performance demonstrate a continuation of the momentum we established last year," said Miles Flint, President of Sony Ericsson. "We have announced a number of exciting new products during the quarter many of which are already shipping and have been well received by consumers. The company continues to develop hit model products with a clear consumer proposition that appeals to operators, and then rapidly ramp-up volume to meet market demand," he added.

Sony Ericsson continued to build on the success of 2006 with strong growth in Asia Pacific, Latin America and Europe. The company captured market share in these markets through low and mid-tier products such as the W300 and W200 Walkman® phones and the K310 camera phone without undermining profitability. Margins improved year-on-year despite the increased proportion of mid and low tier products in the line-up illustrating management's focus on controlling cost and maintaining margins while expanding Sony Ericsson's appeal to a wider market.

Sony Ericsson also announced a number of attractive new products during the quarter, including two new Cyber-shot™ phones, five additional Walkman® models across a variety of price points to further strengthen its unique music offering, and its first HSDPA handset aimed primarily at the North American market.

In February in Japan Sony Ericsson started shipping the SO703i, a mobile phone with selectable Style-Up panels that include a scented sheet to match the panel's design, for NTT DoCoMo, and the W51S, a new clam-shell phone with illuminated icons, for au (KDDI). Both phones were well received by consumers.

During the quarter Sony Ericsson made a number of strategic announcements:

Following the rapid growth in sales in the Asia Pacific region, the company announced plans to start manufacturing phones in India through its global manufacturing partners, Flextronics and Foxconn.

In February Sony Ericsson announced it had completed the acquisition of the Swedish software company UIQ Technology AB, and established a separate holding company, UIQ Holdings, to manage the business.

In March Sony Ericsson signed licensing and development agreements concerning entry-level GSM, GPRS and EDGE mobile phones with Sagem Communication (SAFRAN Group). Through this co-operation, Sony Ericsson will be able to strengthen its position in the entry level area of the market.

Sony Ericsson forecasts that the 2007 global handset market will be above 1.1 billion units. The company believes that in Q1 2007 it grew market share around 2 percentage points compared with the same period last year to over 8%.

Sony Ericsson will make a total payment of Euro 848 million to its parent companies in 2007 in the form of dividends, or both a dividend and a capital redemption.

WALKMAN® and Cyber-shot™ are trademarks or registered trademarks of Sony Corporation.

Style-Up is a trademark or a registered trademark of Sony Ericsson Mobile Communications AB.

- ENDS -

EDITOR'S NOTES:

Financial Statements and Additional Information:

Financial Statements:

Consolidated Income Statement
Consolidated Income Statement - Isolated quarters
Consolidated Balance Sheet
Consolidated Statement of Cash Flows
Consolidated Statement of Cash Flows - Isolated quarters
Additional Information:

Net Sales by Market Area by Quarter

Sony Ericsson Mobile Communications serves the global communications market with innovative and feature-rich mobile phones, accessories and PC-cards. Established as a joint venture by Sony and Ericsson in 2001, with global corporate functions located in London, the company employs over 7,500 people worldwide, including R&D sites in Europe, Japan, China and America. Sony Ericsson celebrated the 5th anniversary of the start of the joint venture on 1st October, 2006.

Sony Ericsson is the global title sponsor of the Women's Tennis Association, and works with the Association to promote the Sony Ericsson WTA Tour in over 80 cities during the year. For more information on Sony Ericsson, please visit www.sonyericsson.com

CONTACTS:

Press/Media
Sony Ericsson Corporate Communications
Aldo Liguori (London) +44 208 762 5860
Merran Wrigley (London) +44 208 762 5862

Investors/Analysts
Ericsson Investor Relations
Gary Pinkham (Stockholm) +46 8 719 0858

Sony Investor Relations
Takao Yuhara (Tokyo) +81 3 6748 2180
Shinji Tomita (London) +44 207 444 9713
Sony Ericsson Media and Analyst Conference Call - Q1 2007 Business Update

20 April , 2007 (following Q1 07 Results released at 7:30 am UK time hosted by Miles Flint, President of Sony Ericsson Mobile Communications

8:00 am UK time

9:00 am Central European time (CET)

3:00 am Eastern Time US (EST)

4:00 pm Japan time (JST)

Webcast:

A live webcast of the conference call will be available at http://www.ericsson.com/ericsson/investors/

Or please click here to join the webcast directly: http://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=181700&eventID=1522431

The archived webcast will be available approximately 1 hour after the completion of the conference call.

Call-in Numbers:

UK & Europe: +44 (0) 20 7138 0809
Sweden: +46 (0) 8 5876 9445
US: +1 718 354 1158
Japan: +81 (0) 3 3570 8242
This press release contains forward-looking statements that involve inherent risks and uncertainties. We have identified certain important factors that may cause actual results to differ materially from those contained in such forward-looking statements. For a detailed description of risk factors see Sony's and Ericsson's filings with the US Securities and Exchange Commission, particularly each company's latest published Annual Report on Form 20-F.

The full report (including tables) can be downloaded from the following link:

http://hugin.info/1061/R/1120177/205877.pdf

Copyright © Hugin ASA 2007. All rights reserved.

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