Shares in Sony, the Japanese electronics and entertainment conglomerate, have tumbled by almost 9 per cent following reports the company is facing an annual loss of around $1.1bn.
Shares of rival Toshiba Corporation also dropped by around 7 per cent after Japanese media said it too was headed for a big loss this financial year.
According to the Nikkei business newspaper and broadcaster NHK, Sony has seen sales of its liquid crystal display screens digital cameras and other electronics products fall dramatically as a result of the global downturn.
The company has also been hit hard by the strengthening of the yen, which makes Japanese exports more expensive.
Bellweather company
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| The global economic crisis has hit Japan's tech giants hard [Reuters] |
Sony, seen by many analysts as a bellweather for the overall health of the Japanese economy, has traditionally seen about 80 per cent of its sales come from overseas.
The company had previously forecast a profit for the year 2008/09 of around 200 billion yen ($2.2bn).
An operating loss would be Sony's first in 14 years and could increase pressure on management for bolder restructuring than a plan unveiled last month that called for curbing investment, exiting businesses and cutting 16,000 jobs.
"I think there's a good chance the company will further accelerate its restructuring from what has been announced in December," Kazuharu Miura, an analyst at the Daiwa Institute of Research, told Reuters news agency.
A Sony spokeswoman said that the loss figure was speculation and declined to comment further.
The company is scheduled to announce its quarterly earnings results on January 29.
Nikkei tumbles
The global downturn has hit Japanese tech firms hard, with demand for electronics goods plummeting causing inventories to pile up and prices to tumble.
Media reports have also suggested that Toshiba is likely to announce an annual operating loss for the first time in seven years because of its deteriorating chip business.
Reports of massive losses resulted in the benchmark Nikkei average share closing down 4.8 per cent on Tuesday.
A stronger yen and a fall on Wall Street on Friday also hurt other exporters and the Nikkei at one stage hit its lowest point in a month.
The broader Toppix index also ended the day down 4.9 per cent.