Sony Ericsson announced on Friday its earnings for the fourth quarter and posted a higher-than-expected loss for the time frame. At the same time, the mobile phone maker announced that it planned to further cut costs, mainly due to the fact that it expected the market condition to go from bad to worse.

The company was earlier expected to post a $72 million loss, but it announced pretax losses of around $346 million (261 million Euros). For comparison, Sony Ericsson posted a $501 million profit for the previous year. The operating losses before restructuring charges went up to $133 million. The original forecast was of a $33 million loss, while a year before the company announced a $489 million profit.

“We foresee a continued deterioration in the market place in 2009, particularly in the first half,” Sony Ericsson president Dick Komiyama said in a statement.

The mobile phone maker owned by Ericsson and Sony Corp. announced that it was undergoing a cost saving program, which should reduce expenses by 300 million Euros annually. At the same time, the company came up with other plans as well, which are meant to allow it to save another 180 million Euros annually, and the measure should have full effect at the end of this year.

Sony Ericsson stated that the handset market saw a 6 percent growth in 2008, up to around 1.19 billion units. The previous forecast showed a 10 percent rise for the market segment. The average selling price in the fourth quarter was of 121 Euros, higher than the expected 110 Euros, yet lower than the 123 Euros a year before.

“Sony Ericsson forecasts that the global handset market will contract in 2009 and that the industry ASP will continue to decline.”

The company, which is the third handset maker in the world, following Nokia and Samsung Electronics, issued two profit warnings last year due to lower phone sales.