Underperforming handset-vendor Sony Ericsson is at the centre of reports this week suggesting its portfolio is set to undergo a major restructuring when it announces its third quarter results later this month. A Forbes report cites Carnegie Bank analyst Martin Nilsson as stating that Sony Ericsson “will narrow down the portfolio” and “will put its mind to being smaller, but more profitable.” The vendor has already this week reiterated its commitment to achieve €300 million (US$414 million) in cost savings over the next year, which includes a total headcount reduction of 2,000 employees and consultants worldwide. TheStreet.com adds that this announcement has spread fear that the handset maker may abandon both its high-end smartphone and low-end mobile business lines, severely shrinking its portfolio. “Sony Ericsson may be forced to focus on the upper half of the mid-range market,” Tero Kuittinen, senior director of research with Global Crown Capital, told the publication. The report notes that if Kuittinen is correct and Sony Ericsson winds down its low-end phone models while discontinuing development of high-end models, the company would be left with only its Walkman and Cybershot product lines.

In August Sony CEO Howard Stringer voiced his frustration at the vendor’s performance, leading to speculation that the alliance could be wound down. The handset vendor’s troubles were marked by a 97 percent drop in second-quarter net profit this year, falling to just €6 million from €220 million in the year-earlier period. The company said at the time it would face “challenging market conditions” for at least the rest of the year. According to a recent Gartner study, Sony Ericsson was the world’s fifth-largest handset vendor by unit sales in Q2, shifting 23 million units in the second quarter, giving it a market share of around 7.5 percent, down from 8.9 percent in the year-earlier quarter. Meanwhile, Mobile Today reports that Sony Ericsson is planning to shut down its flagship retail store located in London’s Kensington neighbourhood, amid rumours the outlet has never turned a profit. The company reportedly plans to concentrate its efforts in Asia, where it currently has 200 stores.