Sony Ericsson has confirmed speculation it is to cut its handset portfolio following its first quarterly net loss in more than five years, reported Friday. The Financial Times (FT) notes that the world’s fifth-largest handset vendor – with a market share of approximately 8 percent – has announced plans to cut its device range by 20 percent to raise profitability. The FT adds that Sony Ericsson’s president, Dick Komiyama, said the company is to consolidate three handset development divisions into one to reduce duplication and improve efficiency, and will not rule out increasing its €300 million cost-cutting programme, which involves removing 2,000 jobs, to improve profitability. Previous reports have suggested the vendor is likely to abandon both its high-end smartphone and low-end business lines, focusing instead on the upper half of the mid-range market.

On Friday, the company reported a net loss of €25 million (US$33.8 million) for the third quarter, down from a profit of €267 million in the same period a year ago, while sales dropped 9.7 percent to €2.81 billion. In August, Sony CEO Howard Stringer voiced his frustration at the vendor’s performance, leading to speculation that the alliance could be wound down. Sony Ericsson has already this year issued profit warnings in the first and second quarters. Although the company forecasts that the global handset market for 2008 will grow at around 10 percent from more than 1.1 billion units in 2007, it has warned that the industry Average Selling Price (ASP) will continue to decline. In separate news, Telecompaper, citing a report in The Nikkei, states that the vendor is to stop supplying handsets to Japanese market-leader NTT DoCoMo and has also withdrawn from a venture led by the operator to develop advanced mobile phone technology. The vendor will reportedly continue to supply Japanese CDMA operator KDDI with devices, but has withdrawn from its DoCoMo partnership due to increasing development costs and sluggish sales.