Troubled handset vendor Sony Ericsson today reported a surprise return to profit, following almost two years of losses. It posted net income of EUR21 million in the quarter ended March 31, 2010, compared to a loss of EUR293 million in the year-ago period. Sony Ericsson’s return to profitability came despite a 19 percent year-on-year decrease in sales (to EUR1.4 billion) and a 28 percent fall in units shipped (10.5 million total quarterly shipments).  Improved margins (helped by a 12 percent increase in ASPs to EUR134) and cost-cutting helped its return to the black. It claims a handset market share of around 4 percent, having seen its share fall by a single percent sequentially.

Sony Ericsson has been attempting to stem losses since the second quarter of 2008, and is pinning hopes on its new smartphone portfolio. Its first Android device – Xperia X10 – and its Symbian-based Vivaz started shipping in the first quarter. “Both models have been well received by global customers,” said president Bert Nordberg in a statement. “Increases in both gross and operating margins show that we are on the right track to build the correct cost structure for our business organization and strategy,” he added. “We will continue to work through the transformation programme to ensure that we are competitive.” Sony Ericsson said it maintains a forecast of slight growth in units in the global handset market in 2010.