Carphone Warehouse and Phones4U suspended sales after a flood of returns from customers reporting problems with the phone.
The manufacturer, a joint venture between Japan's Sony and Sweden's Ericsson, had hoped that the launch of the Satio, which has a 12 megapixel camera, would boost its fortunes and allow it to compete more effectively against smartphones.
Sony Ericsson has made a loss for the last five consecutive quarters. It attributes the problem to a software glitch and added that resolving the problem was its ‘utmost priority'.
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