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Sony Ericsson reports surprise fall in handset sales

Models show off new Xperia smartphones
Image caption Sony Ericsson is pinning its hopes on its new Xperia smartphones

Sony Ericsson has reported weaker-than-expected net profits of 49m euros ($69m, £43m) and a surprise fall in handset sales.

The mobile phone manufacturer said it shipped only 10.4 million units in the third quarter, down 5% from the second quarter, and well below expectations.

"Sony Ericsson's overall performance is stabilising," said the firm's head Bert Nordberg.

Mr Nordberg blamed the poor sales figures on a components shortage.

The company was reporting its third consecutive quarter of profits, well up from the 12m euros it recorded in the second quarter, and reversing the 164m euro loss it saw a year ago.

But the Swedish-Japanese joint venture's result was still about 5m-10m euros less than most analysts had expected.

Supply chains

Driving the disappointing performance was the weak sales data, which the chief executive attributed to a supply bottleneck.

"Our volume did not meet expectations," said Mr Nordberg. "That is the one reason sticking out."

"There are supply chain shortages on the market, and that has affected us," he said, speaking to the Reuters news agency.

China was accused of secretly blocking important "rare earth" mineral exports to Japan during a diplomatic dispute last month.

Rare earth minerals are crucial in the production of many electronics goods, including mobile phones.

It is not clear whether Mr Nordberg was alluding to the incident.

Smart strategy

Mr Nordberg reported that his company's strategy of building up smartphone sales was succeeding.

"Smartphones now comprise more than 50% of our sales," he said.

Sony-Ericsson launched its new Xperia smartphones - which use Google's "Android" operating system - in the US and China during the three months.

"It is our ambition to become the global number one handset provider for the Android platform," said Mr Nordberg.

The strategy was reflected in a sharp rise in the average selling price of its handsets, up 35% on a year earlier to $154.

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