By Max Clarke

Continued supply chain problems and issues with component supply resulting from March’s devastating earthquake and tsunami in Japan have seen Sony Ericsson deliver a loss of €50 million.

Smartphones, notably the popular Xperia model, account for a growing portion of the Swedish-Japanese venture’s revenue and have been particularly affected by components shortages.

Profits for Q1 2011 were still healthy, at €11 million.

"Sony Ericsson's second quarter profitability was affected by the March 11 earthquake in Japan,” Bert Nordberg, President and CEO of Sony Ericsson. “We estimate that the impact of earthquake-related supply chain constraints on our portfolio was close to 1.5 million units, with most of the effect in the early part of the quarter. Our shift to Android-based smartphones continues with smartphone sales accounting for more than 70 percent of our total sales during the quarter. We have shipped more than 16 million Xperia smartphones to date. We have introduced eight new Xperia smartphones this year and we continue to see strong consumer and operator demand across the Xperia smartphone portfolio."

Cash flow from operating activities during the quarter was negative Euro 224 million, mainly due to increases in accounts receivables and inventories, negative net income and timing of certain payments. New external borrowings of Euro 165 million were made during the quarter to enhance liquidity and growth, resulting in total borrowings of Euro 769 million at the end of the quarter. Total cash balances at June 30, 2011 amounted to Euro 516 million.

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