Sony Ericsson's profits fell by almost half in the first quarter as declining feature phone shipments bit into revenue and the earthquake in Japan disrupted the company's supply chain.
The handset maker's net income slid to $15.7 million in the first quarter ended March 31, from $30 million during the same period last year.
"The Japan earthquake made it a challenging quarter operationally and we are experiencing some disruptions to our supply chain," Sony Ericsson President and CEO Bert Nordberg said in a statement. "We will continue to evaluate the situation."
Handset shipments dropped 23 percent to 8.1 million units as Sony Ericsson continued to shift its handset lineup away from mass-market feature phones in favor of Android-based smartphones. Sony Ericsson estimates that it holds about 5 percent of the global smartphone market in terms of units shipped, and about 3 percent of the market in value.
Smartphones comprised 60 percent of the manufacturer's sales during the first quarter, helping to boost the average price of the company's handsets. Sony Ericsson's average selling price across its smartphone and feature phone portfolios rose slightly to $201, from $191 last year.
The increase in the average selling price partially offset slumping handset shipments, and sales dropped 19 percent to $1.6 billion.
Looking forward, the company forecasts "modest growth" in the global handset market this year, but did not provide specific numbers.
Sony Ericsson launched the Android-based Xperia arc and Xperia PLAY toward the end of the first quarter, but the devices didn't come out in time to boost earnings. The slim Xperia arc is just 8.7 mm thick. The Xperia PLAY is targeted at gaming buffs and comes with slide-out controls intended to simulate the Sony Playstation gaming experience.