Mobile phone joint venture Sony Ericsson has faced dwindling profits for more than a year as its main markets strain under economic pressure. In the third quarter of 2008, the company dropped to a €25 million loss. Just one year prior, by contrast, the company reported a profit of €267 million. Last quarter, Sony Ericsson's earnings slipped to a €73 million loss.

On Friday, the joint venture announced that it could post a loss of between €340-390 million for the first quarter of 2009.

Touchscreen smartphones have taken the driver's seat in the mobile phone economy, and Sony Ericsson's specialty remains in Sony-branded feature phones, like theCybershot, Walkman, and Bravia mobile phone lines. The company's presence in the smartphone category remains weak.

Yesterday, Sony Ericsson announced that Najmi Jarwala, President of Sony Ericsson USA and the head of the North American division, would be leaving at the end of this month to "pursue other career opportunities." On April first, Anders Runevad, Executive Vice President and Head of Global Sales and Marketing at Sony Ericsson, will handle Jarwala's duties until his successor is named.

Some speculated that this was tantamount to the rats that first abandon the sinking ship, since North America is not Sony Ericsson's prime market anyway. Further fueling this speculation were the rumors that wireless hardware company Ericsson was looking to get out of the joint venture.

One thing is certain, if Sony Ericsson's losses actually exceed the €390 million the company warned, this will not be the last bad news we hear from the company this month.