Sony Ericsson, the Japanese-Swedish mobile phone maker, says it has closed the gap on rivals and returned to profit in the first quarter of 2004.
Sony Ericsson's handsets are selling at nearly double last year's rate.
Pre-tax profit was 97m euros ($119.5m) in the period, compared with a loss of 113m euros a year earlier.
The figure is more than double market forecasts and comes after the world's fifth-largest handset maker focused on new products and cost cutting.
The results contrast with Nokia, which recently reported weaker profits.
Sony Ericsson said it sold 8.8 million phones in the quarter and increased its market share to about 7% from 6% in the previous three months.
South Korea's Samsung last week reported an increase in global market share to 14% while Nokia, the long-time market leader, has admitted its market share has slipped.
Some analysts estimate the Finnish mobile phone giant now has little more than 30% of the market.
Sony Ericsson executive vice president Jan Wareby said the company's gains were thanks to very strong sales of phones in the low and medium-price range. Clam-shell designs are also doing well, he said.
The joint venture between Japan's Sony and Sweden's Ericsson was born in April 2001, and appears to be eating into the market share of the leading mobile phone makers such as Nokia, Motorola and Siemens.
The boss of Sony Ericsson, Katsumi Ihara, said recently that as more video and music becomes available to download, users would switch to new mobiles with better screen and sound quality.
As a result, the company has put its weight behind the new generation of 3G phones. Its first 3G model is the clamshell Z1010.