Sony Ericsson posted third-quarter loss of $33.7 million, with sales dropping 10% to â‚¬2.76 billion (US$3.7 billion).
The company also saw a reduction in revenue per handset of around $10, with the average handset price decreasing to around $146.
According to Sony Ericsson this is due to an increase in sales of lower-priced handsets as well as decreased sales of premium handset.
The company spent around â‚¬34.2 million (US$46.9 million) on a restructuring effort aimed at reducing operating expenses.
Around 2,000 jobs will be cut as part of the drive, which should be complete in late 2009. Sony Ericsson expects to save at least â‚¬298 million (US$400 million) annually.
These results come just days after Sony Ericsson rival Nokia posted its own sobering Q3 results, due partly to a slump in the global handset market. Nokia's profits dropped 28% over the period.
Sony Ericsson is optimistic that the market is recovering, and is expecting it to grow a solid 10% for 2008.
But because this growth will be driven by emerging markets, the company is predicting continued decreases in the average sale price per-handset industry-wide.
In other news, the Nikkei Morning News is reporting that Sony Ericsson has pulled out of the NTT DoCoMo-led consortium that had been established to develop new cellular technology.
According to the news service, which did not cite a source, the decision was made due to slower spiralling development costs and slower sales within Japan.
Sony Ericsson will no longer supply phones to NTT DoCoMo, but will continue to supply KDDI, the news service said.