Struggling handset maker Sony Ericsson reported a $398 million second-quarter loss and reiterated plans to focus on higher-end smartphones instead of its Walkman and Cyber-Shot sub-brands.

"We still believe the remainder of the year will be difficult for Sony Ericsson," said a Sony Ericsson spokesman. "Our performance is starting to improve due to our cost reduction activities."

During the quarter the company said it shipped 13.8 million devices -- a 43 percent drop from 2008.

Last quarter Sony Ericsson, a joint venture between Japan's Sony and Sweden's Ericsson, posted a $387 million loss as mobile phone industry expected its worst decline on record as the global recession hit demand.

Compared to a year ago, the company reported just a $3.1 million loss.

Sony Ericsson's loss has been partly due to a heavily focus on its Walkman and Cyber-Shot sub-brands -- music and camera phones -- when consumers increasingly demand handsets with strong overall performance.

Rivals have forged ahead to launch on new smartphones such as Apple's iPhone 3GS and Palm's Pre.

Still, the company hopes to win back customers by releasing a range of new high-end devices, such as integration with Sony's PlayStation games console. But these new handsets wouldn't reach the market until the fourth quarter.

The report comes the same day rival Nokia said its earnings fell 66 percent.

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