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Sony Ericsson: Profits Are Slumping, But It Is Still Slugging Away

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A slump in profits for the world’s sixth-largest handset maker Sony (NYSE: SNE) Ericsson (NSDQ: ERIC), which today reported its results for the quarter ended March 31, 2011. Net income was €11 million ($15.7 million) compared to €21 million for the same quarter a year ago.

Operating income of €19 million, however, beat analysts’ expectations of €15 million, according to MarketWatch.

Looks like one of the biggest problems was sales of mid-range handsets, which have been the bread and butter of Sony Ericsson’s operations in the last several years. Sales, according to the company, fell by 19 percent to €1.15 billion, with handset units declining by 2.4 million to 8.1 million for the quarter.

Sony Ericsson, a JV between Ericsson and Sony, is not making up for that gap yet with its smartphone portfolio, but those higher-ranging handsets, which are developed on the Google (NSDQ: GOOG) Android platform, are definitely starting to make an impact: the average selling price of the handsets is up to €141, a rise of five percent on a year ago. Smartphones, says the company, now account for sixty percent of devices sold by the company.

The company has been trying to carve out a stronger position for itself on the services front to carve out a more distinct brand for itself: last week it launched its own channel within the Android market — the first phone maker to do this, although there will surely be more to follow.

That potentially gives the company a place to house and promote content specifically for its devices, which include the Xperia Play — the so-called “PlayStation” gaming device — and, apparently, a new Walkman phone in the works.

The company is, however, facing some pretty big issues in terms of production right now which could scupper all the best-made plans:

Not only is it facing some component shortages for new devices such as the neo because of the earthquake and tsunami in Japan, but that highly-anticipated Play has been delayed in some markets (such as the UK) due to what is apparently in a software glitch on the devices.