Sony and rival Panasonic are set to report a slump in quarterly earnings and may cut full-year forecasts after being hit by yen strength, Thai floods and consumer gloom in Europe during the vital pre-Christmas period.

Both companies saw their debt ratings downgraded by Moody's Investor Services last week, as their TV divisions continue to bleed red ink despite restructuring efforts.

Sony, which reports on 2 Feb., is expected to barely break even for the normally lucrative October-December quarter. Operating profit is seen shrivelling 94 percent to JPY8.8 billion (USD114.3 million), based on an average estimate from 6 analysts polled by Thomson Reuters I/B/E/S.