The Japanese-Swedish mobile phone maker post smaller-than-expected losses and predicts growing handset market in 2010.

Japanese-Swedish enterprise Sony Ericsson surprised by posting lower-than-expected losses due to better margins helped by sales of new high-margin phones as well as cost cuts.

Fourth-quarter loss before taxes amounted to 190 million euro compared with 199 million euro the third quarter and 261 million euro the same quarter a year ago. Analyst forecast a loss of 221 million euro in a SME Direkt poll.

"The refreshed portfolio, coupled with the business transformation programme has started to positively impact our financial results”, Bert Nordberg, President of Sony Ericsson, said. “We are confident that our business is on the right track”.

Gross margin amounted to 23 percent, up from 15 percent a year ago.

At the same time sales fell to 1,750 million euro from 2,914 a year ago while the number of units shipped declined to 14.6 million from 24.2 million.

The handset vendor's sales have suffered hard in the recession. But it has a positive outlook as the handset market is expected to grow slightly in 2010, the company said.

The previous day Japan's top mobile phone operator NTT DoCoMo Inc said it will launch Sony Ericsson's Xperia smart phone in April, in a direct challenge to heavyweight Apple's iPhone handsets.

The company -- a joint venture established 2001 by the Japanese consumer electronics company Sony Corporation and the Swedish telecommunications company Ericsson -- hasn't made a net profit since the second quarter 2008.