Sony Ericsson, the world's fourth-largest mobile phone maker, said Thursday its net profit rose 54 percent in the second quarter as it continues to expand its market share with low and mid-range phones. Sales were boosted by a 59 percent rise in handset shipments to 24.9 million from 15.7 million the previous year.

The company, a joint venture between Sweden's LM Ericsson and Japan's Sony Corp., has broadened its phone portfolio to target emerging markets in Western Europe and Latin America, growing its global market share to more than 9 percent during the quarter, an increase of around 3 percentage points from a year ago.

Nonetheless, the increasing market share is happening at the expense of margins, with the average selling price of phones and operating income weaker than expected.

"It is good that they are increasing market share, but it's happening at the expense of margins and average prices going down," said Greger Johansson, of Redeye in Stockholm. "They are focusing a bit more on cheaper phones, but they have also boosted costs by spending more on research and marketing."
The news came as Motorola, the world's second largest mobile phone maker behind Nokia, warned investors of a shortfall in 2Q revenue due to weaker-than-expected sales and poor results in its cell-phone units in Asia and Europe, meanwhile, Sony Ericsson expects to continue its market share and revenue growth relying on its music and camera phones sold under Sony's Walkman and Cyber-shot brands.