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Huge reduction in expectations blamed on declining TV sales, price-competition and currency fluctuations

Sony has just announced a dramatically revised profit forecast for the current financial year – and it's blaming declining sales of flat-panel screens and other products due to the global economic situation.

The company also says it's fallen victim to unfavourable currency trends, principally a decline in the yen/dollar exchange rate, but even so the scale of reduction in its expectations has taken financial commentators by surprise.

In July, the company was talking in terms of a 240bn yen (£1.5bn) profit for the current fiscal year, but it's just reduced that forecast by almost 60 per cent to 150bn yen (£950m).

It's also lowered sales forecasts very slightly, from 9.2 trillion yen to 9 trillion, but that's a marginal improvement on the previous year.

More after the break

The company said in its statement that "We expect the results of certain businesses in the Electronics segment, such as the LCD television, compact digital camera and video camera businesses, to be lower than the previous forecast."

The company says those revised expectations are "due to a deterioration in the market environment brought on by the slowing global economy and an intensification of price competition."

The past few months have already been very tough for Sony: the company says it expects to post a 21 billion yen (£132.5m) profit for the second quarter, which ended in September, down 72 percent from the 73.7 billion yen (£465m) it achieved in the same period last year.