The Japanese-Swedish group, now the sixth-biggest player in the global market, said that in the three months to September it made no profit, down from a €49 million ($67 million) net profit during the same period last year.
The company's third quarter sales fell one percent from last year to €1.58 billion and units sold fell 9.0 percent to 9.5 million units with a dip in classic mobile phone sales only partially offset by smartphone sales.
Sony Ericsson chief executive Bert Nordberg said that Android-based smart phones now accounted for more than 80 percent of sales and that the company was "shifting the entire portfolio to smartphones during 2012".
Nordberg told TT news agency that there were clear signs that the European market was in decline.
“For Sony Ericsson, which has always been strong in western Europe, that means that we need to invest a lot in marketing in Asia. We've done that, and it's gone well,” he told TT.
“We also must get sales going in other parts of the world that don't have a debt crisis at the moment...you can't just site and wait for things to get solved in Europe, since no one knows when that will happen.”
Nordberg also refused to comment on reports last week that Japan's Sony was looking to buy out Sweden's Ericsson for full control of the company.