Sony has reported a more than 90 per cent slide in earnings for the latest quarter, far below analysts forecasts, as the slowing global economy took a toll on the world's largest audio-visual electronics maker.
Group operating profits tumbled to £17 million in the April to June quarter - sharply below analysts expectations of £180 million.
Sony shares slid on the Instinet electronic broker system in London after the announcement. Dealers at Instinet said Sony had shed five per cent to 6,730 yen from a 7,070 yen close earlier in the day.
"This is a negative surprise," said Mr Yukikiko Shimada, analyst at Credit Lyonnais. "Bad factors mounted - the costly recalls of cellular phone handsets, worsening electronics products sales, slow video game machine sales. But the figures were beyond our imagination."
Sony attributed the quarterly loss to recall costs for its mobile handsets that totalled 13.1 billion yen and grim global sales in its mainstay electronics sector.
Sony officials said the year was shaping up as a tough one.
The dismal figures surprised analysts, who had in general expected charges related to the recall of defective cellular phones and cooling demand for its products to only moderately cut into Sony's operating profit for the first quarter.
"We didn't think the results would be as bad as this," said Mr Masami Fujino, analyst at Nikko Salomon. "The info-tech slump lingering on the Japanese high-tech sector looks much worse than we had imagined."
Although a weak yen offered some relief by boosting the value of its overseas income, Sony has been hit by costly recalls of mobile phones in Japan and some analysts worry about sluggish sales of the PlayStation 2 game console.
Analysts voiced concerns about the prospects of PlayStation 2 game consoles and questioned whether the company can achieve its target of 20 million units by the end of March next year.
Anlaysts say Sony shares could be in for a further slide.
"I had thought Sony shares had fallen to a relatively good valuation level," Mr Fujino said. "But a further slide is likely following the release of such figures."
In Tokyo, shares in Sony ended down 0.7 per cent at 7,070 yen, while the benchmark Nikkei lost 0.28 per cent.