Mobile phone maker Sony Ericsson posted better-than-expected fourth quarter earnings on Wednesday and said it gained market share in that period and in 2007 as a whole.

Sony Ericsson, owned by Ericsson and Sony Corp., said in a statement it made a pretax profit of 501 million euros versus 384 million in the third quarter and 502 million a year earlier.

Analysts surveyed by Reuters had expected fourth-quarter pretax profit of 459 million euros. The company had sales of 3.77 billion euros, versus a forecast for 3.76 billion.

Sony Ericsson said the average sales price (ASP) of its mobile phones, a key indicator for profitability, rose to 123 euros from 120 euros in the third quarter. Analysts had forecast an ASP of 121 euros in the fourth quarter.

Sony Ericsson President Hideki Dick Komiyama, who took over in November, said the target remains to become one of the top three players in the industry and Sony Ericsson's momentum made this possible.

The joint venture said it gained two percentage points of market share in 2007, taking its share up to slightly more than 9 percent. Market leader Nokia is entrenched in top spot, followed by Samsung and Motorola.

Profits are good, ASP is up sequentially ... Overall it's a good publication for the group, said Eric Beaudet, analyst at Natixis Securities. It's a little bit above expectations on the profit level, and that's the important part.

The gross margin improved to 31.8 percent in the fourth quarter from 30.7 percent in the third and 29.0 percent a year earlier.

The good ASP and the fact that the gross margin was near an all-time high is encouraging, said SEB Enskilda analyst Mats Nystrom. This is a proof of strength, given that many in the market had expected weak results.


Units shipped in the quarter reached 30.8 million, an 18 percent increase from a year earlier.

Sony Ericsson said sales were in line with the year-earlier figure, which reflected its strategic shift to focus on lower-priced products in its portfolio. The market was keen to see whether Komiyama would signal any shift in strategy, but there was no word in the announcement of any such changes.

Sony Ericsson finished a very good year, which highlighted how the company has strategically positioned itself to capture market share with an expanded product portfolio, the firm said.

Investments are being made in both R&D and brand building, to deepen the portfolio and strengthen Sony Ericsson's presence in new and developing markets around the world.

Komiyama said in the statement: Our target remains to become one of the top three players in the industry, and the momentum we established in 2006 and 2007 makes this a realistic and achievable ambition.

Jari Honko, analyst at EQ Bank, said the news was supportive for co-parent Ericsson's share price. The wider market is very very weak, but this report is still good news for Ericsson. It looks good, the company has developed well. Sales volume was a bit soft.

Ericsson shares were down 0.86 percent at 14.91 at 0817 GMT, with the wider Swedish stock market down 2 percent at 952.77.

(Editing by Paul Bolding/Rory Channing; additional reporting by Tarmo Virki in Helsinki)