Sony Ericsson is revamping its business as it failed to make a profit in the third quarter.
The company broke even after recording a profit of €49m (£42.8m) in the same period last year.
Its sales dropped nine per cent drop year-on-year.
The company claimed an improvement was being seen, however, noting that both profits and sales were up on the second quarter.
Sony also it wil only sell only smartphones from 2012.
The android-based Xperia phones already make up 80 per cent of its sales, and the company estimates it has 12 per cent of the market volume and 11 per cent of its value.
Sony is reportedly in talks to buy out Ericsson’s 50 per cent stake in the business.
The move would allow faster integration of Sony’s entertainment assets into the smartphones.