Sony warns of worst ever full-year loss Sony has warned of a Y520bn net loss for its just-ended financial year, its worst deficit ever and more than double its previous estimate, after it was forced to give up billions of dollars of tax credits in the US that it had previously counted as earnings. The struggling Japanese electronics and entertainment group, which is preparing to cut its workforce by 10,000, or 6 per cent of its global headcount, said the accounting revision for the year ended on March 31 would not affect its cash flow or earnings from operations. It left its estimate of its pre-tax loss unchanged at Y115bn. Still, the revision underscores Sony's recent troubles. The value of the tax credits it was claiming as income, which are known as deferred tax assets, depends on its ability to earn potentially taxable profits in the future, but successive losses at the company have undermined the accounting case that it can do so. "Based on US GAAP [generally accepted accounting principles] under which Sony reports its consolidated results, cumulative losses in recent fiscal years are considered significant negative evidence regarding the realisability of deferred tax assets," the company said in a statement on Tuesday. Sony has lost money in each of the past four years, owing largely to its unprofitable television manufacturing division. Kazuo Hirai, its new chief executive, who took over on April 1, has promised to make "unavoidable, painful choices" to fix or dispose of poorly performing operations. Other Japanese television makers have also fallen on hard times amid fierce competition from South Korean and Taiwanese groups and a rise in the value of the yen, which has made exporting unprofitable. Sharp, which is selling a 10 per cent stake in itself to the Taiwanese contract electonics manufactuerer Hon Hai, also widened its loss forecast on Tuesday, from Y290bn to Y380bn, citing additional restructuring charges. Sony said on Tuesday that, although US accounting guidelines had forced it to abandon the tax credits in light of recent losses, it believed restructuring measures including a downsizing of its TV business would allow it to return it to profit this year. In the statement, it said it expected to earn Y180bn, before tax, from its operations this financial year, a figure that was in line with previous unofficial projections from company executives. It did not give a geographic breakdown, however; tax charges are calculated based on the performance of national divisions and subsidiaries. Sony began its last financial year expecting a net profit of Y60bn but has now downgraded that estimate three times. It is scheduled to report final results for the year on May 10. The company has already forfeited deferred tax assets in Japan, where profitability declined faster than elsewhere as a result of a strong yen, which hurts exports, and supply disruptions caused by the March 2011 earthquake and tsunami. A resulting Y360bn one-off tax charge kept Sony in the red last year. Sony's shares closed 3.5 per cent lower in Tokyo before the earnings revision was announced, a more severe drop than the broader Nikkei 225 average, which fell 0.1 per cent, but in line with declines at other electronic exporters, whose shares have been hit by a renewed appreciation of the yen.