Toshiba profits fell 99 per cent over the second quarter as flash memory prices fell and demand for home appliances continued to decline.
The Japanese electronics giant reported a loss of 26.9 billion yen for the second quarter, a sharp fall from the 25 billion yen profit it made last year.
Electronics products were the worst affected and made a 63.5 billion loss for the firm, as falling prices for NAND flash memories hit the sector.
Home appliances also made a loss over the last three months, as a slump in home sales discouraged consumers from buying white goods.
Sales across all products declined seven per cent as consumers cut back on spending.
"As the worldwide financial crisis continues and concerns for inflation grow, global economic trends are unclear and difficult to predict," Toshiba said in a statement.
Withdrawing from the HD DVD business after losing the format war to Sony's Blu Ray had a "positive impact", the company said, contributing to a 15.5 billion yen profit for the digital products segment.
The firm added it has not changed its profit expectations for the full year.
However, Toshiba admitted economic conditions have altered drastically since its predictions made in September and the company will need more time to asses the situation.
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