Sony posts whopping $2bn loss as incoming chief executive faces huge challenge

Sony has posted a massive $2bn loss for the quarter ending in December 2011, far larger than was expected, as the firm was battered by issues such as floods in Thailand and increased competition from firms such as Apple hurting sales in Western markets.

Sony has previously warned it post losses, but it was widely expected these would be around $1bn.

But with the combination of adverse issues, and what it cited as "unfavourable foreign exchange rates", the firm fared even worse, leaving incoming chief executive Kazuo Hirai with a mountain to climb.

Overall the firm's losses totalled $2.1bn for the quarter, with revenues falling 17 per cent in the last three months, compared to profits of $949m over the same period in 2010.

The firm also increased its forecast for the overall losses it expects to post for the full 2011 fiscal year from $1.18bn to $2.28bn.

Sony also said the cost of buying out telecoms firm Ericsson from the company's joint mobile phone venture hit its earnings.

Speaking at a news conference to announce the figures the firm's chief financial officer Masaru Kato admitted it made for grim reading.

"The impact of all these things is a very severe earnings report," he said, according to several sources.

On Wednesday the firm confirmed that vice president Hirai would replace current chief executive Howard Stringer as the head of the company on 1 April, in a move designed to help the company return to its strengths.