In the October to December period, the world’s fifth-biggest cell phone maker saw its net loss shrink to 167 million euros ($236 million) from 187 million a year earlier, but for the full-year the shortfall swelled from 73 million euros in 2008 to 836 million in 2009.

Sales plunged from 11.24 billion euros in 2008 to 6.79 billion in 2009, with volumes dropping from 96.6 million units sold to 57.1 million.

Sony Ericsson’s chief executive Bert Nordberg said the positive effects of a restructuring programme undertaken a year ago were expected to be seen as of the third quarter.

“2010 will still be challenging as the full benefit of cost improvements will not impact results until the second half of the year, however we are confident that our business is on the right track,” he said in the earnings report.

The quarterly loss was the company’s sixth straight quarter in the red, but it was better than analyst forecasts of a loss of 254 million euros.

The Ericsson share was up 2.40 percent at 72.50 kronor on the Stockholm stock exchange in mid-morning trading.

Sales in the quarter plunged by 40 percent from the same period a year ago to 1.75 billion euros, up however by three percent from the third quarter.

The Swedish-Japanese joint venture, the first of the big phone makers to present its earnings report, has cut thousands of jobs in the past year as it struggles amid competition from Apple and Research in Motion, the makers of smartphones iPhone and Blackberry.

The recent recession hit the mobile phone industry and Sony Ericsson hard in 2009. The company is basing its new strategy on entertainment applications.

“We will continue to focus on returning the company to profitability by establishing Sony Ericsson as the communication entertainment brand based on an exciting portfolio of mid- and high-end products,” Nordberg said.

Sony Ericsson’s strongest features are its camera and music applications, according to analysts.

Its average selling price per unit was 120 euros, compared to 121 euros a year earlier and higher than its traditional competitors Nokia, Samsung and LG.

The group said it expected “slight growth” in the global handset market in 2010.