Sony warns of £2.1 billion loss

By Kiyoshi Takenaka and Sachi Izumi

TOKYO (Reuters) - Sony warned it would post a record $2.9 billion (2.1 billion pound) annual operating loss due to sliding demand and a stronger yen, and unveiled fresh restructuring steps to revive its ailing electronics operations.

The operating loss will be Sony's first in 14 years, underscoring deepening troubles for a company that has fallen behind Apple's iPod in portable music, Nintendo in videogames, and is losing money on flat TVs.

Sony said it now expects an operating loss of 260 billion yen (2.1 billion pounds) for the year to March, down from an earlier projection for a 200 billion yen profit and far worse than earlier media estimates of a loss of 100 billion yen.

The maker of Bravia LCD TVs and PlayStation game consoles said it would beef up a restructuring plan outlined last month, more than doubling a cost-cutting target for the year to March 2010 to 250 billion yen.

Sony, however, plans to keep investing aggressively in strategic fields such as the development of auto-use batteries, a promising area as the use of hybrid and electric vehicles grows.

"While these are extremely challenging times, we must be fully prepared to embrace the opportunities that await us once these dark economic clouds begin to part," Sony Chief Executive Howard Stringer told a news conference on Thursday.

Last month Sony outlined a restructuring plan that included curbing investment, closing five to six plants and cutting a total of 16,000 regular and contract jobs globally to save 100 billion yen a year in costs.

NO ALTERNATIVE