Sony Ericsson (News - Alert) saw lower third-quarter profits in light of lower margins and higher taxes, according to a report from The Associated Press. In addition, the company announced it will limit its portfolio to smartphones in 2012, The AP added.

The joint venture’s quarterly net profit dropped to 0 from $67.26 million during the same time period in 2010. Also, quarterly sales dropped to $2.18 billion from $2.2 billion in the same quarter in 2010, The AP said.

“We will continue to invest in the smartphone market, shifting the entire portfolio to smartphones during 2012,” Sony Ericsson CEO Bert Nordberg (News - Alert) announced.

Currently, Sony Ericsson’s Xperia smartphones represent over 80 percent of company sales, The AP said. Sony Ericsson switched to the Android (News - Alert) operating system from Google for smartphones starting in 2008, The AP said.

In a related matter, the Financial Times reported that Sony Ericsson “could be subject to a buy-out by Sony.” Sony owns the joint venture with Ericsson.

Bill Glaser, the company’s chief financial officer, “acknowledged the intense competition in the market given launches from all large rivals, including products from Apple (News - Alert), Samsung and Nokia this month,” the Financial Times reported.

In addition, Glaser said the economic outlook in Western Europe, worsened by the Eurozone debt crisis, could impact consumers’ decisions to get a smartphone, the Financial Times (News - Alert) adds.

In other company news, Sony Ericsson’s Nordberg said the company is likely not going to get involved in legal disputes over patents that involve its competitors, according to a report on TMCnet.

Dow Jones reported that Sony Ericsson has a “large existing patent portfolio” and cross-licenses the patents, Nordberg said.

Dow Jones explained that Sony Ericsson solved “patent issues by cross licensing agreements, whereby it may use other players' patents in return for them using Sony Ericsson's technology,” according to TMCnet.