Updated from 3:27 a.m. EDT

Sony Ericsson

swung to a third-quarter loss on hefty restructuring charges, but the handset maker surprised Wall Street with better-than-expected unit shipments in the quarter.

The Stockholm-based joint venture between


(ERIC) - Get Report



(SNE) - Get Report

reported a third-quarter loss of 25 million euros, compared with a profit of 267 million euros in the year-ago period and 6 million euros in the previous quarter.

Sony Ericsson recorded 35 million euros of charges in the quarter related to the company's massive restructuring. Last month, Sony Ericsson reiterated its commitment to making cost savings of 300 million euros over the next year, which includes a total headcount reduction of 2,000 employees and consultants worldwide.

Dick Komiyama, president of Sony Ericsson, said Friday that the company's target remains to reduce operating expenses by 300 million euros annually by the end of the second quarter 2009, with the full effects expected to appear in the second half of 2009.

"These plans are progressing in line with expectations," Komiyama said in a statement. "We are committed to executing our alignment plan as speedily as possible to ensure we have the right size and organizational structure to return the business to healthy profitability."

Revenue for the world's fifth-largest handset maker slipped 9.6% from a year ago to 2.80 billion euros, which Sony Ericsson blamed on "exchange rate fluctuations, as well as a shift of the product mix to more lower priced phones." Gross margin dropped to 22% from 31% a year ago and 23% in the second quarter, while operating margin came in at negative 1%, compared with a positive 13% a year earlier.

The average selling price per unit, a key metric for cell phone makers, slid to 109 euros from 120 euros a year ago and 116 euros in the second quarter. The ASP was down both sequentially and year-on-year because of more lower priced phones and increased price competition in the market for mid- to high-end phones.

The company said unit shipments slipped to 25.7 million in the quarter from 25.9 million in the same period a year ago, although that figure was up sequentially from the 24.4 million units shipped in the second quarter and was better than many analysts had expected. Also on the positive side, Sony Ericsson said its market share remained flat sequentially at roughly 8%.

Looking ahead, Sony Ericsson forecasts that the global handset market for 2008 will grow at a rate of about 10% from more than 1.1 billion units in 2007, while the industry average selling price will continue to decline.

In July, the company acknowledged that challenging market conditions were "expected to prevail for Sony Ericsson for at least the rest of 2008, and in particular for the third quarter."

Both parent companies were trading mixed early Friday. Ericsson was flat at $6.97, while Sony lost 4.2% to $22.75 in premarket trading.

Among other handset makers,


(NOK) - Get Report

, which

surprised Wall Street

with an upbeat outlook Thursday, was off 1.6% to $16.30.



was off 1.1% to $5.55, while


(QCOM) - Get Report

was tacking on 0.3% to $39 in early trading.

Among smartphone makers,

Research In Motion


was gaining 5.3% to $58.75, and


(AAPL) - Get Report

was up 0.8% to $101.89.

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