Out of the Gate: Ericsson shares tumble

Ericsson shares gave up 85 cents, or 7.8 percent, to $10.01. Sony Ericsson is a 50/50 joint venture between Ericsson, a Swedish telecom equipment maker, and Japanese electronics firm Sony Corp.

Sony shares fell $1.37, or 3 percent, to $44.18.

The company said early Friday it expects to break even for the quarter and predicts its gross margin would decline. It expects to ship 24 million phones during the quarter.

Sony Ericsson reports its second quarter results July 18.

In a note to investors, Cowen & Co. analyst Matthew Hoffman said he was not surprised by the announcement. The company has had problems with its product portfolio, he said, adding he predicts shares will lose value over the next several quarters.

"Sony Ericsson's woes, along with cash flow issues at the parent, are the primary reasons we remain at 'Neutral' on Ericsson shares," he said.

Separately, Oppenheimer's Ittai Kidron said the news indicates a sluggish trend in the handset market and predicted an "unpleasant" second quarter for the industry.