World number three mobile phone maker Sony Ericsson posted a much bigger than expected quarterly loss as it braced for even weaker demand and also announced plans for further cost cuts, possibly including jobs.

President Dick Komiyama forecast global demand would shrink at least five per cent this year, and yesterday said market share was less of a priority than preserving profitability.

While Sony Ericsson was the first of the big handset makers to release fourth-quarter earnings, it was only the third of the top four to react to crumbling sales in the past few days, after Motorola and Samsung. The number one mobile phone maker, Nokia, will report on January 22.

Sony Ericsson made a 261 million euros ($346 million) pretax loss in the three months to the end of last month, versus a mean forecast in a Reuters poll for a 77m euros loss.

A year earlier, the Ericsson and Sony venture made a 501m euros profit.

Sales rose to 2.91bn euros from 2.81bn but gross margin halved to 15pc from 32pc due to impact from exchange rate fluctuations, restructuring charges and writeoffs.

The company said it was on track to deliver 300m euros in annual savings, and had initiated more measures aimed at saving another 180m euros from the end of this year.

'We cannot exclude that it will also influence headcount at the company. But we have to come back to the details of that programme, probably at the next report,' global sales chief Anders Runevad said.

Asked in a conference call about the prospects for profitability this year, Komiyama said, 'Overall, it still probably will be (on the) negative side, but we plan to be positive in the second half.'