Sony Ericsson has reported a net profit figure of zero for the third quarter of 2011, as company continues to struggle in the increasingly competitive handset market.

The figure is down from the €49m ($67.6m) it netted in the same period a year ago, but an improvement on the loss of €50m it recorded in the second quarter of this year.

Third quarter sales fell only very slightly to €1.59bn compared to the €1.6bn from 3Q10.

The firm explained that several factors contributed to this disappointing performance, and one key reason is that the company is in transition as it looks to gain a stronger grasp of the smartphone market.

“Our feature phone shipments declined year on year by 49 per cent, but this is consistent with our shift to smartphones,” explained a Sony Ericsson spokesperson.

“We are making the shift to smartphones; our smartphone share of total sales were up from nearly 70 per cent in Q2 to more than 80 per cent in Q3.  We have said that we will shift the portfolio to entirely smartphone during 2012.”

The spokesperson added that the firm has shipped 22 million smartphones to date and will continue  bring new phones to market.

“The Xperia arc S and the Xperia Ray have been well received.  In addition, the Xperia PLAY continues to gain momentum. We have nearly tripled the gaming ecosystem to 150 titles since we introduced the product. In addition, today we announced that the Playstation Certificated experience will be broadened within the portfolio.“

“We will continue to differentiate by leveraging our Sony’s entertainment assets such as Video and Music Unlimited,” said the spokesperson.