The Edinburgh based company was hit after Apple started switching contracts for its iPod Nano and iPod Touch in 2008 to other electronics firms.
It is not expected to feature in the iPad when it launches in the coming weeks.
Chairman Mike Ruettgers said Wolfson had “battened down the hatches” during the period and was confident it would return to significant growth in the second half of 2010.
Revenues fell in the year to $121.3m (£77.8m) from $198m a year earlier. Underlying operating expenses were cut to $69.2m from $77.9m in 2008
Meanwhile profits of $22.9m in 2008 turned into losses of $7.7m. Some analysts had been forecasting the losses to hit $10m.
However, the shares rose nearly six per cent as analysts focused on Ruettgers’s apparent optimism about new products, particularly its AudioPlus technology which is aimed at providing high-quality sound with low power usage.
It was selected by Microsoft for its Zune MP3 player – ahead of strong competition. The firm said it launched 34 new products in 2009, twice as many as in 2008, and its new audio products were now shipping
It added in a statement: “This should increasingly benefit us as we progress through the year.”