Sanyo had earlier predicted net profit of 20 billion ¥ ($172 million) for the current fiscal year but now expects to finish 50 billion ¥ ($430 million) in the red. The company has downwardly revised its sales forecast from 2.4 trillion ¥ ($20.7 billion) to 2.2 trillion ¥($18.9 billion. The earlier operating profit prediction of 65 billion ¥ ($559 million) has been lowered 46 percent, to 35 billion ¥ ($301 million).

"Digital still cameras and mobile phones have been Sanyo's core businesses and main profit-earning sectors, but there has been a big decline in profitability" in those areas, said president Toshimasa Iue. "These plunges are the major factors in the downward revision.

"Even in such core businesses, we need to carry out structural reform" to restore profitability," Iue said.

Sanyo's first-half net loss, announced Nov. 24, was not as deep as had been predicted, though sales fell 3 percent short of expectations. The company lost 3.6 billion ¥ ($31 million) for the half on sales of 1.1 trillion ¥($9.5 billion). Operating income for the half was 16 billion ¥ ($138 million).

"The first half was better than the original prediction, but we anticipate a harsh second half," said Koichi Maeda, executive vice president of Sanyo. The company expects price erosion in consumer electronics, especially in digital cameras and mobile phones, and inventory adjustments for mobile handsets, Maeda said.

Sanyo sells about 11 million digital cameras and 12 billion mobile phones annually.

Some media have reported that Sanyo is considering selling off its digital-camera and mobile-phone businesses, but Iue denied the reports. On the contrary, he said, "we can make the most of our technology for function-rich mobile phones, for which demand will grow, and we're focusing on value-added digital cameras with our own brand."

Sanyo plans to centralize mobile-phone production at its Malaysian plant to rein in costs.

Since implementing is restructuring plan in November 2005, Sanyo has shed a number of noncore businesses. It spun off its semiconductor operation as Sanyo Semiconductor in July. It closed its TV production line in Japan in April and formed a joint venture with Taiwan's Quanta in October. Also in October, it formed a joint venture with China's Haier for refrigerator manufacture.

"We've done what was planned in the midterm project. Our final target is to recover profitability," Iue said, adding Sanyou would "carry out all the necessary structural reform within this fiscal year."

Sanyo hopes to net 20 billion ¥ ($172 million) in earnings next year on sales of 2.26 trillion ¥($19.4 billion).