SONY Ericsson Mobile Communications Ltd, the mobile-phone venture of Sony Corp and Ericsson AB, reported a smaller third-quarter loss than analysts had anticipated as its unit shipments and market share held up.

The net loss was 25 million euros (US$33.8 million), compared with a 267-million-euro profit a year earlier, the company said yesterday. Sales fell 9.7 percent to 2.81 billion euros. Analysts in an SME Direkt survey predicted a loss of 141 million euros on sales of 2.74 billion euros, the medians of 22 estimates, Bloomberg News reported.

Sony Ericsson, formerly among its parents' biggest profit contributors, posted its first quarterly loss in five years on costs to cut jobs and sinking prices for its Walkman and Cybershot camera phones. The London-based company is eliminating 2,000 jobs globally, which Chief Executive Officer Dick Komiyama said will help restore "healthy profitability."

"All in all, this seems like a positive surprise amid all the challenges Sony Ericsson has been facing, and hence a relief to Ericsson," Deutsche Bank analyst Jussi Uskola said. Uskola recommends investors hold Ericsson shares.

The company booked restructuring costs of 35 million euros in the third quarter. Sony Ericsson reiterated it aims to save 300 million euros a year by the second half of next year, and the cost plan is progressing "in line with expectations."

Unit sales

Sony Ericsson's unit sales fell to 25.7 million from 25.9 million a year earlier, topping an SME Direkt estimate of 24.3 million units. The venture, which kept its global market share at about 8 percent in the quarter, is betting the new touch-screen Xperia handset will take market share from competitors including Apple Inc's iPhone.

The company has marketed its models in James Bond movies, and the Xperia X1 device lets users customize the screen with nine touch-screen panels. The C902 phone with a high-resolution camera was among the company's best sellers in the quarter.

Sony Ericsson, created in 2001 from the mobile-phone units of Ericsson and Tokyo-based Sony that struggled to survive individually, made its mark with advanced phones featuring high-resolution cameras and music storage. It later slipped in the global mobile-phone rankings after failing to sustain demand and prices for its devices.

"As expected the third quarter has continued to be challenging," Komiyama said in the statement.