Electronics giant Sony predicted a second consecutive annual loss as the global slump in demand forces the company to cut prices.
The Tokyo-based company said it will probably post a net loss of 120 billion yen ($1.26 billion) in the 12 months ending March 31, 2010, after a 98.9 billion yen deficit a year earlier. The forecast is in line with the median estimate in a Bloomberg survey of nine analysts.
The back-to-back annual losses will be Sony's first since its listing in 1958, underscoring deepening troubles for the company.
The company is standing by a cost cutting plan that would see it save 300 billion yen. The cost-cut measures include a reduction of 16,000 jobs.
Sony said it will shut three more domestic and two overseas factories this year, including a flat-screen TV factory in Mexico. That brings the total of its planned plant closure to eight as it had already announced plans to stop production at three factories.
A Sony spokesman said the number of workers affected by the decision was included in the 16,000 job cuts.
Sony aims to boost sales of its PlayStation 3 game console by nearly 30 per cent to 13 million units.
Some analysts said Sony, which is feeling the pain in every corner of its operations ranging from semiconductors to movies to insurance, desperately needed a killer product to get back on track and position itself for any recovery.
"Their outlook gave me the impression that their business is heading for a gradual recovery. But it would all depend on whether they will be able to start making popular products because right now they have no 'No. 1' product," said Fujio Ando, senior managing director at Chibagin Asset Management.
"I see Sony's branding power weakening."
Sony, which competes with Samsung Electronics in LCD TVs and Canon in digital cameras, said it aims to sell 15 million LCD TVs this financial year, down slightly from 15.2 million last year.
The maker of Bravia LCD TVs and PlayStation game consoles forecast its operating loss for the year ending March 2010 would halve to 110 billion yen from the 227.8 billion loss a year ago and less than a consensus forecast of a 132.9 billion yen loss in a poll of 20 analysts by Thomson Reuters.
Sony chief financial Officer Nobuyuki Oneda said the company expects losses at its electronics operations to widen and its games division to stay unprofitable this financial year.
He said its TV operations would likely lose money for a sixth straight year but it aims to bring it to the break-even level in the second half.
While job cuts and plant closures may help the company save operating costs this year, the maker of the PlayStation 3 lags behind Nintendo in game-console shipments and trails Samsung Electronics in television sales.
Nobuo Kurahashi, analyst at Mizuho Investors Securities, said Sony would need more than an improvement in the TV business.
"Cost-cutting and wringing profits out of the TV division are important, but that will only take you so far," he said.
"What I really want to know is how Sony is going to compete after the economy recovers."
Mr Kurahashi said Sony's focus on portable devices with network capability wasn't yielding results, while rivals such as Sanyo Electric appear to be securing a brighter future by latching on to solar panels and organic displays.
Sony fell 6.8 per cent to 2,400 yen on the Tokyo Stock Exchange before earnings were announced. The stock
has rallied 41 per cent in the past three months on speculation that job cuts would help revive earnings.
Bloomberg