July 16 (Bloomberg) -- Sony Ericsson Mobile Communications Ltd., the mobile-phone venture of Sony Corp. and Ericsson AB, reported a fourth straight quarterly loss on lower demand for its handsets.

The second-quarter net loss was 213 million euros ($300 million), smaller than analysts anticipated, compared with net income of 6 million euros a year earlier, the company said in a statement today. Sales fell 40 percent to 1.68 billion euros, missing analysts’ estimates.

Sony Ericsson announced three cost-reduction programs and carried out 2,350 of 4,000 announced job cuts in the past year as it adjusted to falling sales. Cash flow has been negative since the beginning of 2008, and Ericsson has said it will support the venture with more capital if necessary.

“Sony Ericsson is suffering from a weak handset market like everyone else, but they are worse positioned than most others and these losses reflect company-specific issues,” said Mats Nystroem, a Stockholm-based analyst with SEB Enskilda. “The result, although very, very poor, was not worse than expected and it signals that losses may be bottoming out.”

Ericsson, the Stockholm-based parent, rose 0.5 percent to 76.80 kronor at 12:13 p.m. in the Swedish capital. Sony closed down 0.9 percent at 2,285 yen in Tokyo before Sony Ericsson’s earnings statement.

Analysts in an SME Direkt survey predicted a 284 million- euro net loss on sales of 1.79 billion euros, based on 28 estimates.

Product Plans

The handset maker, based in London, has lagged behind competitors such as Samsung Electronics Co., Nokia Oyj and Palm Inc. in refreshing its product line to compete with Apple Inc.’s iPhone and Research In Motion Ltd.’s BlackBerry models.

The company sees its Cybershot camera phones and Walkman music phones converging at higher price points, executives said on a teleconference. “We see a new market emerging where you combine the best of these categories in one device,” said executive vice president Anders Runevad.

The Satio phone, optimized for playing movies from an online library, and other new models will be available in time for Christmas shopping, Sony Ericsson said.

Restructuring Strategy

Sony Ericsson’s gross margin, or sales minus manufacturing costs, dropped to 12 percent in the quarter from 23 percent a year earlier.

“We still believe the remainder of the year will be difficult for Sony Ericsson,” Chief Executive Officer Dick Komiyama said in the statement. “Our performance is starting to improve due to our cost-reduction activities.”

Restructuring charges will stay within the projected 500 million euros, with savings of 880 million euros annually taking effect in the second half of 2010, the company said.

The venture shipped 13.8 million phones, a 43 percent drop from a year earlier. The company estimated its market share was more than 5 percent in the second quarter, down from 6 percent estimated last quarter. The average selling price of its handsets rose to 122 euros from 120 euros in the first quarter and 116 euros a year earlier.

Sony Ericsson reiterated its forecast that global industry handset unit sales would shrink at least 10 percent this year from the 1.19 billion sold in 2008. The venture is the world’s fifth-largest mobile-phone producer.

Nokia Oyj is the world’s largest mobile-phone maker.

To contact the reporter on this story: Diana ben-Aaron in Helsinki at dbenaaron1@bloomberg.net

Last Updated: July 16, 2009 06:18 EDT