Weighed down by the global economic downturn, Sony Ericsson Mobile Communications Ltd. has projected a gloomy forecast for the first quarter this year. As the handset sales continue to fall, the company said it will report a pretax loss of as high as 390 million euros ($534 million) in the first quarter

The loss does not include the restructuring cost of 10 million euros to 20 million euros, the company said in a statement.

Its net sales and net income before taxes too will continue to get hit by the lower consumer demand and the de-stocking in the retail and distribution channels, as it expects its gross margin to plummet.

Vis-à-vis handset shipments, Sony Ericsson plans to ship around 14 million phones in the first quarter, at an average selling price of 120 euros, as compared to the 24.2 million phones shipped, at an average price of 121 euros, earlier in the fourth quarter last year.

The company has also announced job cut of at least 2,000 employees as demand for its handsets shrinks, joining others like Nokia which has announced 1,700 additional job cuts this week.

The Sony Ericsson mobile unit, once among the biggest profit contributors for its parents, has drawn third back to back losses, as the global mobile phone market may shrink by 10 percent, twice the earlier predictions.

The dismal forecast spurred an immediate decline in the shares by as much as 5.1 kronor, or 6.7 percent, to 70.7 kronor