Sony Ericsson Gains Momentum in the Second Quarter

• The company gained momentum and market share
• The global market grew faster than expected
• Products announced in Q1 began to ship and were well received

The consolidated financial summary for Sony Ericsson Mobile Communications AB (Sony Ericsson) for the second quarter ended June 30, 2005 is as follows:

Units shipped in the quarter reached 11.8 million, a 14% increase compared to the same period last year and a 26% increase sequentially. Sales for the quarter were Euro 1,614 million, representing a year-on-year increase of 7%. Income before taxes was Euro 87 million and net income was Euro 75 million, which represents a year-on-year decrease of Euro 26 million and Euro 14 million respectively, reflecting continued investment in R&D.

Sony Ericsson gained momentum and market share during the quarter as new products started shipping. The higher unit shipments reflected the broadening of the product portfolio to appeal to a wider range of price segments in the market. Average Selling Price (ASP) remained stable in line with expectation. The global handset market grew faster than expected during the quarter, primarily because of increased demand in the lower price segments in both mature and emerging markets. Sony Ericsson has upgraded its global market outlook for 2005 to over 720 million units.

“Sony Ericsson is pleased to report a solid second quarter which saw the company gaining momentum as new products began to ship, and the increased investment in product portfolio expansion over the past year started to bear fruit. New phones announced in Q1, such as the 2 megapixel, auto-focus K750 camera phone, the K600 mid-tier UMTS 3G phone, and the K300, an affordable camera phone, were well received by consumers and started to make a good contribution during the quarter. We are also excited to be the first to bring a complete music proposition to market with the new Walkman® phone, that will start shipping shortly", said Miles Flint, President of Sony Ericsson.

During the second quarter, Sony Ericsson announced a number of new phones including its second Walkman phone (W600), a mid-tier stylish compact clam-shell (Z520) and an affordably priced stick phone aimed at Asia and Eastern Europe (J210). In Japan, the W31S, a CDMA 1X EV-DO music phone for KDDI, started shipping and has been selling very well.