Engadget.com :

The good news, if you want to call it that, is that Sony Ericsson’s most recent quarter loss is not as bad as its epic $382 million tab prior, and at this point there’s no talk of further en masse job cuts. That said, this new report isn’t exactly sunshine, and the Q2 results show a 213 million Euro ($299 million) net loss. Product shipments were around 13.8 million, down 43 percent compared with last year. Some blame is attributed to the focus on mid-tier feature phones in lieu of a greater smartphone push — SE says it’s working to correct that direction, but its higher end devices won’t hit until fourth quarter. One interesting note is that one of those late-year handhelds is said to “integrate with PlayStation,” but before you get excited over the oft-rumored PSP phone, we’d venture to say it’s more likely that description’s referencing the Remote Play-supporting Aino. From what we can tell, there’s no indication of what’s in the cards to improve Q3, so we won”t exactly be surprised if the story repeats itself three months from now.

HH.com :

I think Sony creating a PSP phone would be genius! As said above, there are a ton of Rumors floating around but I think that it would be the only STRONG competitor against the iPhone. I know Sony would also be able to make more “playable” games unlike the simple touch games for the iPhone. This would also increase gaming sales with instant downloadable content.

Source Engadget.com