Sony has seen weak demand for its products in the downturn
Electronics giant Sony has reported its first annual loss in 14 years, after being hit by a big drop in sales.
Sony reported a loss of 98.9bn yen ($1.04bn; £685m) for the year to the end of March, compared with a profit of 369.4bn yen the previous year.
The company blamed the global downturn and the strong yen for the loss. Worldwide sales were down 12.9%.
It had previously announced it would be cutting 8,000 of its 185,000 workforce and closing 10% of its factories.
However, the loss was not as bad as Sony had expected. It had forecast a loss of 150bn yen back in January.
Sony's shares closed down 6.8% at 2,400 yen ahead of the results.
Several Japanese companies have said they have been hurt by the strong yen, which make exports more expensive.
On Tuesday, Hitachi announced an annual loss of 787.3bn yen - a record for a Japanese manufacturer.
Sony, which makes PlayStation games consoles and Vaio PCs, forecast a net loss for the current financial year of 120bn yen.
And it said it would carry on with its restructuring programme of closing plants and cutting jobs.
Analysts greeted Sony's results with cautious optimism.
"Their outlook gave me the impression that their business is heading for a gradual recovery," said Fujio Ando, senior managing director at Chibagin Asset Management.
"But it would all depend on whether they would be able to start producing popular products, because right now they have no 'Number One' products."
Sales of the PS3 console rose from nine million units to 10 million
Sony has had to battle with the popularity of rival Nintendo's Wii console.
Sales in Sony's gaming division were down 18%, largely thanks to the falling popularity of its older PlayStation 2.
Sales of the PS2 console fell from 13.66m units the previous year to 7.91m, while sales of software for the PS2 decreased from 154m units to 83.5m.
The decline in PS2 sales outweighed a rise in sales of the newer and more powerful PS3.
In March, the PS3 outsold the Nintendo Wii in Japan for the first time in 16 months. However experts saw this as a temporary blip rather than a sign of the Wii's decline.
Earlier this month Nintendo said it made an annual profit of 279.1bn yen.
Sony's president Ryoji Chubachi stepped down in April as part of a managerial reshuffle at the group.
Mr Chubachi had overseen Sony's electronics sector which is at the heart of the firm's woes.
Chairman and chief executive Howard Stringer took on the role of president.
Since then, Sony's shares have gained 43%.
Nobuo Kurahashi, an analyst at Mizuho Investors Securities called the move "a positive sign of how Sony is frantically moving forward toward change".
Mr Stringer, who was born in Wales but is a US citizen, is the first non-Japanese boss of Sony.
He has also promoted three relatively young executives to his managerial team under the reorganisation.