Sony Ericsson loses market share, sees tough H2

By Anna Ringstrom and Helena Soderpalm

STOCKHOLM (Reuters) - Mobile phone maker Sony Ericsson braced for a tough second half of 2009 after losing market share in the second quarter as its mid-range products found little favor among a declining customer base.

The handset industry this year faces its worst downturn on record and Sony Ericsson expects the global market to shrink at least 10 percent.

The firm has rapidly lost market share in recent quarters with a portfolio focused on camera and music phones, mid-range products that are suffering more from the demand slump than basic models or high-tech gadgets such as the i-Phone.

The first global handset maker to report second quarter figures, Sony Ericsson on Thursday posted a pretax loss of 283 million euros ($398.6 million), in line with expectations, including 1 million in restructuring charges.

World no.1 Nokia (NOK1V.HE) is due to report second-quarter earnings on Thursday at 1000 GMT.

The mean forecast in a Reuters poll had been for Sony Ericsson, the world's fifth-biggest, to report a 284 million euro loss before restructuring charges of 62 million.

Sony Ericsson said cost cuts and a better product mix had contributed to losses shrinking from the 358 million euros of the previous three months.

"As expected, the second quarter was challenging and we still believe the remainder of the year will be difficult for Sony Ericsson," said Sony Ericsson President Dick Komiyama.

"Our focus remains on bringing the company back to profitability and growth as quickly as possible. Our performance is starting to improve due to our cost reduction activities."

'STABILITY AT A LOW LEVEL'

Komiyama told a conference call there were signs of stability in the handset market.

"We see continued tough conditions ... There is a certain stability in the market, but it is on a low level," he said.

Sony Ericsson shipped 13.8 million units in the quarter -- a decrease of 43 percent year-on-year and down 5 percent on the previous quarter -- at an average selling price of 122 euros.

Several analysts said the shipments figure was disappointing.

The firm said its market share was over 5 pct in the second quarter, compared to 6 percent in the previous quarter and a mean forecast for 5.9 percent.