The Japanese electronics company Sony announced the loss of $3.1bn (£1.9bn) from January to the end of March.
The company claims that the loss was, in part, due to writing off $4.4bn related to a tax credit.
Several factors beyond Sony's control contributed to this loss as well.
Operating in Japan at this time produced negative consequences; Sony says the stronger yen hurt the company in terms of worldwide sales.
The company suffered in the aftermath of the 11 March earthquake and tsunami in Japan. Production was made difficult by the disorder of local supply chains.
The company was also hurt by a widespread security breech of its PlayStation Network and Sony Online Entertainment services. More than 100 million accounts were invaded, resulting in the theft of customers' names, passwords, and addresses.
Sony believes this incident will diminish profits by $170m due to insurance and damage costs. They aim to have this security issue resolved within the month.
Sony has produced profit loss for the past three years, but they predict that they will become profitable again as 2011 continues. They hope that after cutting costs they will be able to achieve a profit of $976m (£600m) within the year.
However, earlier this year Sony forecast a $860m profit by the end of March and instead produced this substantial loss.