Handset manufacturers are in for a face tough time as leading manufacturers continue to witness drop in sales. One such player, Sony Ericsson posted loss of euro 274 million in Q2 2009 and also witnessed sales drop by 40%.

Sales for the company slid to euro 1.6 billion as compared to euro 2.8 billion in Q2 2008. Sales in Q1 were at euro 1.7 billion. The company managed to improve its performance on the net income front as it posted loss of euro 213 million in Q2 as compared to loss of euro 293 million in Q1 of this year.  Average selling price of handset devices improved from euro 116 a year ago to euro 122 in Q2.

The company claimed to have a market share of 5 % at the end of Q2 2009. The company’s liquidity stood at euro 965 million.

“As expected, the second quarter was challenging and we still believe the remainder of the year will be difficult for Sony Ericsson. Our focus remains on bringing the company back to profitability and growth as quickly as possible, and our performance is starting to improve due to our cost reduction activities. The new product portfolio that integrates communications, entertainment and social media applications should contribute to healthier topline development when shipments start later this year,” said Dick Komiyama, President, Sony Ericsson. “We remain confident that the actions we are taking will further improve our financial situation and strengthen Sony Ericsson’s competitiveness.”

The company managed to ship only 13.8 million units as compared to 24.4 million units shipped in Q2 2008 and 14.5 million units shipped in Q1 2009.

The company expects the cost saving measures implemented by it to show results by second half of 2010. The company has till date reduced its work force by 2,350 since the implementation of its cost saving measures.

As part of its quarterly achievement highlights the company said that it expanded on its strategy of transforming into the Communication Entertainment brand with the announcement of three new mobile phones; Aino, Satio and Yari as well as expansion of its content delivery platform, PlayNow which now allows to include an application store and downloadable movies via PC.

On oulook for the remaining part of the year, the company said that it expected the handset industry to witness drop in demand by upto 10 %.