Sony Ericsson's profits fall flat at year-end

Sony Ericsson hopes that its new Xperia handsets will prove appealing in 2011

Mobile phone joint venture Sony Ericsson suffered a poor last three months of 2010, having cut prices to sell off outdated handsets.

It recorded net income of 8bn euros (£6.8bn, $10.8bn), well down from the 27bn euros the firm averaged during the first three quarters of the year.

It sold 11.2 million handsets, up 8% on the previous three months, but at an average price of 136 euros, down 12%.

The company is hoping its new Xperia smartphones will boost profits.

However, customers will have to wait until the end of March before the next version of the Google Android-operated phone becomes available.

"Our products were ageing in our portfolio," explained Sony Ericsson chief executive Bert Nordberg. "Product life-cycle has become much shorter."

The results for the final quarter of 2010 reversed the trend seen by the company earlier in the year, during which sales had been lower than in 2009 but profit margins had improved.

For the year as a whole, the company reported 90m euros net income, up from a 2009 loss of 835m euros.

This was despite seeing the number of handsets sold for the year fall by a quarter to 43 million.

The mobile phone market as a whole experienced a healthy recovery last year, with an estimated 13% increase in global unit sales, but Sony Ericsson's market share has dwindled to just 4%.

The latest latest results came in sharp contrast to rival Apple, who again beat forecasts for sales of its iPhones.