Swedish-Japanese Sony Ericsson, the world's number five mobile phone maker, posted lower than expected fourth-quarter pretax profit on Thursday and said it saw only modest growth in the handset market this year.

Sony Ericsson, owned by Swedish company Ericsson and Japanese group Sony Corp, is facing difficulties to keep up with competition from smart-phones such as iPhone and PC-like handsets. "The competition is so tough you cannot afford not to refresh your portfolio," Gartner analyst Carolina Milanesi told Reuters.

Shipments in the quarter were “somewhat constrained by a lack of new product launches during the quarter,” the company said in the statement.

Net income was 8 million euros ($10.7 million), rebounding from a loss of 167 million euros in the year-earlier period.

The full-year net profit was 90 million euros compared to a net loss of 836 million euros in 2009. Sony Ericsson also completed a cost-saving programme that saw 4,000 jobs being shed.

Last year "was a turnaround year for Sony Ericsson. Our four consecutive quarters of profit reflect the success of our shift towards an Android-based smartphone portfolio," company president and chief executive Bert Nordberg said in the earnings statement.

Sony Ericsson, which in 2010 shipped 43.1 million phones, said it "forecasts modest growth in units in the global handset market for 2011."