Sony Ericsson reports strong increase in sales and shipments for its two core business areas GSM and Japanese standards, and expects to be profitable in the second half of 2003.

The joint venture between Sony and Ericsson has announce a strong increase in sales for the second quarter of 2003. Units shipped in the quarter reached 6.7 million, which is 34% higher year-on-year and 23% higher compared to the first quarter 2003.

Net sales for the quarter were Euro 1.125 million, representing year-on-year and sequential increases of 18% and 40%, respectively.

In the areas of strategic focus and in the wake of successful product launches, the GSM business posted 84% year-on-year growth in shipments and Japanese standards shipments increased 45% year-on-year. This business growth is attributable to a strengthened product offering coupled with strongly improved supply and logistics performance.

Sony Ericsson has earlier announced the decision to increase its focus on GSM/EDGE/UMTS and Japanese standards. Further to the phase-out of Sony Ericsson's American CDMA business and GSM R&D activities in Munich, total restructuring costs are estimated to approximately Euro 70 million of which Euro 58 million has been recognized in the second quarter.

The restructuring activities are well underway and are projected to generate yearly run-rate savings of approximately Euro 120 million when completed, with some benefit in the second half of 2003.

Sony Ericsson is expected to be profitable in the second half of 2003 as a result of the increasing momentum in the company's new GSM and Japanese product portfolio. However, Sony Ericsson will not be profitable for the full year 2003 due to restructuring costs and losses incurred in the first half of the year