Handset maker

Sony Ericsson

posted a sharp decline in second-quarter sales and earnings, although results matched the company's own tempered forecast.

The Stockholm-based joint venture between


(ERIC) - Get Report



(SNE) - Get Report

said second-quarter income plummeted 97% to 6 million euros from 220 million euros in the year-ago quarter. Similarly, net income was down 95.4% from the previous quarter.

Sony Ericsson said revenue slipped 9% from a year ago to 2.82 billion euros, which the company blamed on a "unfavorable exchange rate fluctuation, continued slowing market growth in mid- to high-end phones and increased competition." Gross margin fell from above 29% a year ago and in the first quarter to 23.1% in the most recent quarter.

The average selling price per unit, a key metric for cell-phone makers, slid to 116 euros from 125 euros a year ago and 121 euros in the first quarter. The ASP was down both sequentially and year-on-year due to the impact of softer sales of high-to mid-end models. Sony Ericsson said its market share for the quarter remained constant at 8%.

Additionally, the company's unit shipments fell to 24.4 million in the second quarter from 24.9 million in the same quarter a year ago, although that was up sequentially from the 22.3 million units shipped in the first quarter.

Last month, Sony Ericsson warned it would ship approximately 24 million phones during the second quarter with an estimated ASP of 115 euros. The company also said that gross margin was expected to decline both year over year and sequentially, and net income before taxes was estimated to be about break-even.

Much as


(NOK) - Get Report

did when it

released its earnings report

Thursday, Sony Ericsson forecast that the global handset market for 2008 will grow at a rate of around 10% from more than 1.1 billion units in 2007. The industry average selling price per unit is expected to decline as "the majority of ... growth is expected to be in emerging markets where lower priced phones dominate."

Looking ahead, Sony Ericsson said that "challenging market conditions are expected to prevail" for at least the rest of this year, especially the third quarter.

Even though results weren't worse than Sony Ericsson had predicted in June, both parent companies were trading mixed early Friday. Ericsson was tacking on 0.2% to $11.85, while Sony lost 2.5% to $41.20.

Among other handset makers, Nokia was rising 0.7% to $27.51, while



was off 1.6% to $7.26.


(QCOM) - Get Report

was unchanged.

As for smartphone makers,

Research In Motion


eased 0.5% to $110.25, and


(AAPL) - Get Report

, which posts quarterly results after the closing bell Monday, was down 1.3% to $169.55.