Sony Ericsson today reported an operating loss of two million Euros in its second quarter results as against 315 million Euros during the same period last year. “Sales for the quarter were Euro 2,820 million, a decrease of 9% compared to the second quarter of 2007 due to unfavourable exchange rate fluctuation, continued slowing market growth in mid- to high-end phones and increased competition. Gross margin also decreased compared with a year ago reflecting a less favourable product mix, with particular impact in Europe, and increased price competition in general,” the report said.

Last month, Sony Ericsson had warned investors of a grim quarter as the company’s shipments and Average Selling Price (ASP) of devices fell. The company shipped 24.4 million handsets as opposed to 24.9 million during the second quarter last month. Known for its high and mid-end multimedia phones, the company’s ASP came down from 121 Euros from the previous quarter to 116 Euros. 

The BBC reports that Sony Ericsson would axe 2.000 jobs worldwide over the coming year to cut operational costs. “We are aligning our operations and resources worldwide to meet an increasingly competitive business environment and to help restore our capability for profitable growth. The measures we are taking are aimed at becoming a faster, more agile and more cost efficient organisation that can continue to create innovative products that excite consumers,” said Dick Komiyama, President, Sony Ericsson.

With the prevailing market conditions, Sony Ericsson is expected to focus more on the entry and mid-end segments, especially for emerging markets like India. The company is said to be in talks to acquire Spice Mobile, an Indian handset brand belonging to BK Modi.