May 14 (Bloomberg) -- Sony Corp. forecast a second straight full-year loss as the global recession forces the company to cut prices of its Cyber-shot cameras and Bravia televisions.

The net loss at the world’s second-largest maker of consumer electronics may widen to 120 billion yen ($1.26 billion) in the 12 months ending March 31, from a 98.9 billion yen deficit a year earlier, Tokyo-based Sony said today. The forecast is in line with analysts’ estimates.

Sony’s first back-to-back annual losses since listing in 1958 may test Chief Executive Officer Howard Stringer’s focus on cost reductions instead of investing in new products. While job cuts and plant closures may help the company save 250 billion yen in costs this year, the maker of the PlayStation 3 lags behind Nintendo Co. in game-console shipments and trails Samsung Electronics Co. in television sales.

“They were hit fairly early by the downturn and have moved quicker than some competitors to restructure, but it remains to be seen if those moves will pay off,” said Hideyuki Ookoshi, who helps oversee $365 million at Chiba-Gin Asset Management in Tokyo. “The problem with Sony is it doesn’t know what it wants to be: Is it a game company, a consumer-electronics maker, a financial-services provider? There’s no direction.”

Sony fell 6.8 percent to close at 2,400 yen on the Tokyo Stock Exchange before earnings were announced. The stock rallied 41 percent in the past three months on speculation that job cuts would help revive earnings.

Operating Loss

The company projected its operating loss, or sales minus the cost of goods sold and administrative expenses, may more than halve to 110 billion yen. The forecast is better than the median 135.6 billion yen loss estimate in a Bloomberg survey of nine analysts. Sony forecast sales may drop 5.6 percent to 7.3 trillion yen, in line with the median estimate.

For the year ended March 31, both the operating loss of 227.8 billion yen and the net loss were smaller than the survey’s median estimates.

Stringer, who’s Sony chairman and chief executive, ousted Ryoji Chubachi as president and took control of the main electronics business last month. Stringer, 67, joined the company in 1998 and became the chief executive in 2005.

The company at the time said it’s combining VAIO computers, Walkman music players and games under Kazuo Hirai, who will head the new division to focus on creating gadgets that can work with each other and connect to the Internet.

Losses From Electronics

The loss at the electronics division was 168.1 billion yen in the year ended March 31, less than the 212.7 billion yen deficit estimated in the Bloomberg survey. The business is headed for a 201.5 billion yen deficit this year, led by losses from televisions, according to the analyst survey.

Worldwide personal computer shipments are projected to fall a record 12 percent in 2009, according to researcher Gartner Inc. Global revenue of liquid-crystal-display televisions will drop 16 percent this year to $64 billion, the first decline in the industry’s history, research firm DisplaySearch predicts.

The job cuts announced in December include 8,000 full-time workers at the electronics business, or 5 percent of the division’s workforce. Sony has scaled back its spending plans for the electronics division by 30 percent and has shut down factories in France and Pennsylvania.

The company said today it would cease production at three plants in Japan used for mobile phones and optical pick-ups at the end of this year. It will also stop making LCD TVs and electronic cables at two plants in Indonesia and in the U.S.

PlayStation vs. Wii

In the games division, Sony posted a loss of 58.5 billion yen. The business will probably incur a fourth straight deficit, as sales of the PS3 and PlayStation Portable machines continue to trail the popularity of Nintendo’s products, according to the analyst survey.

Sony forecast today it will sell 13 million PS3 machines, compared with the 26 million Wii consoles that Nintendo is projecting.

Profit at the film division, which produced “Hancock” and “Quantum of Solace,” fell 49 percent last year, partly because of lower home-entertainment sales, Sony said. The unit may post similar earnings this year, according to the analysts.

Financial Services

The financial-services business posted a loss of 31.2 billion yen last year, in line with the median analyst estimate, after generating profit of 22.6 billion yen a year earlier. The division will generate income of 93.3 billion yen this year, according to the analysts.

Sony plans to spend 110 billion yen on reorganization this year including ending production of LCD TVs and electronics devices, up from 75.4 billion yen, Sony’s Chief Financial Officer Nobuyuki Oneda told reporters in Tokyo.

“As the business environment is expected to remain tough, we’ll proceed with further cost cuts, aiming at saving 300 billion yen or more,” Oneda said.

To contact the reporter on this story: Hiroshi Suzuki in Tokyo at Hsuzuki5@bloomberg.net.

Last Updated: May 14, 2009 05:08 EDT