This column was originally published on RealMoney on July 13 at 11:23 a.m. EDT. It's being republished as a bonus for TheStreet.com readers.Sony Ericsson put in a dazzling performance in the second quarter, providing evidence of strong upgrade demand in Europe. And its raised guidance is in clear contrast to the muted comments coming from other tech sectors lately. However, although there's little doubt the mobile-phone sector is doing better than PC and corporate software makers, investors' growing expectations for a consumer spending slowdown and a recession in the U.S. are likely to drag mobile-phone stocks down with the rest of tech, no matter how much healthier they appear to be. Sony Ericsson's phone volumes rose to 15.7 million units, more than a million above consensus, and up a giddy 33% year over year. The average sales price of 145 euros matched expectations; it was a tick lower than the stellar 150 euros of the first quarter but still 30 to 40 euros above the industry average. The joint venture of Sony ( SNE) and LM Ericsson ( ERICY) is reaping the benefits of getting a couple of key products into volume production ahead of its rivals. Sony Ericsson was the first vendor to get both a 3-megapixel camera phone and a series of reasonably priced music phones into major Western European markets. These 2006 numbers would seem to indicate that European handset upgrade sales remain robust.
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